This is one of those posts where I found very little substance compared to its length. And I didn’t really come out of it with a better understanding of moving money either (as to how correspondent banks ultimately settle the debts, which in turn becomes how countries settle their debts, etc.). I would’ve appreciated more nuance and information on that, even though it’s a vast topic.
To simplify heavily, is SWIFT just an accepted and legal alternative to the hawala system?
Merchant banking was indeed quite similar to hawala, and came out of very similar needs. Correspondent banking is an outgrowth of merchant banking, and essentially allows trust chains to expand.
SWIFT is a messaging system which those trust chains use to communicate.
The messaging system is orthogonal to the trust relationship between banks in different countries. In the old days, this trust came from family bonds, e.g. the various arms of the Fuggers or the Rothschilds. Nowadays, it's... more complicated. The US government spent billions on making foreign banks like BNP Paribas whole on contracts they had with AIG because it could not bail Goldman Sachs without also bailing them out, at least not without destroying the basis of trust in the international financial system. That's the part where compliance, risk management and AML-KYC intervenes, along with government employees installed directly inside the key banks to monitor it.
> To simplify heavily, is SWIFT just an accepted and legal alternative to the hawala system?
No. To simplify heavily, Swift is the network on which the hawala system runs.
To transfer cash from a bank to another bank, one can :
* call the other bank
* send an email
* send a letter
* send a swift message
Since transfering cash is not as simple as it seems (trust is the key), using an established network with clear fields and backups is a good choice. Thus Swift.
Another important point in the article is that cash is typically not transferred, but instead (basically) “your account at my bank is credited equal to the amount that you debit from my account at your bank”
If I want to wire you some cash from bank A to bank B, my bank (A) will debit my account,and credit their account (called a nostro). There, we have two possibilities :
* The two banks are connected (meaning B has an account in A), A will debit their nostro and credit the account of B in A (called a loro) and inform bank B via swift. B will debit the account of A in B, credit their nostro, debit their nostro and credit your account
* The two banks are not directly connected : A will debit my account and credit their nostro. They will then debit their nostro and credit the account of a third institution (another bank or a clearing house). They will send a message to the bank B and the third institution, telling them that the cash should be credited to you. If the bank B and the third institution are connected, see above. If not, the process goes on, until the cash "reaches" bank B.
This is highly simplified, but it's the principle.
No need to be sorry, but yes, Wikipedia articles can be a bit "vague" sometimes, it was just the first reference I found, maybe this one on investopedia is better, though it is also seemingly putting an accent on foreign currency/foreign banks, which I don't believe is the only use (I mean the concept applies to banks in a same country as well, AFAICR):
As I said, Nostro is also used for own accounts. The account refleting the position of the bank (its own money and assets, not the money or assets deposited by its clients) is also called a nostro, at least in Europe.
> how correspondent banks ultimately settle the debts, which in turn becomes how countries settle their debts.
Ultimately the debts and credits either cancel out, or when there is a flow from one country to another - the creditor countries ends up holding them as foreign currency reserves (in $ in bank accounts) or converts them into treasury bonds, gold or other investments - that may or not be transferable from one country to another.
Page 3 is interesting (ignore the rest, they're mostly buzzwords). It shows you the numbers behind the financial infrastructure of the world for international transactions.
> Because people in places like Japan, China, Australia, New Zealand, India, Singapore, Hong Kong, UAE, South Korea, and many others are hibernating.
Nahhh they are all just subsistence living workers and farmers bartering over rocks and other money like objects, unlike us sophistocated folk quaffing Châteauneuf-du-Pape with a side of caviar while we wait for the casino to settle the million dollar wire transfer of our baccarat winnings for the night.
You're missing my point. I'm trying to say the system needs to handle more than 300 messages/sec.
I know there is significant traffic from those countries. I'm from one of those countries.
If you had to pick a peak (and most workloads have a peak), what timezone do you think it would be? It doesn't matter what timezone as long as there's a peak. There could even be multiple peaks and that's better.
It was designed for High Frequency Trading, after iMatix has a contract with JP Morgan Chase in New York.
I was in the team to maximize the number of messages of OpenAMQ, the broker was the bottleneck, then iMatix bought a slovakian company to maximize the speed between A and B (without a broker in the middle).
It was designed for High Frequency Trading, after iMatix has a contract with JP Morgan Chase in New York.
I was in the team to maximize the number of messages of OpenAMQ, the broker was the bottleneck, then iMatix bought a slovakian company to maximize the speed between A and B (without a broker in the middle).
My point is that throughout is likely not the bottleneck in SWIFT (300 messages/sec is quite small). Why design a solution that can handle 900k messages/sec to solve a problem that likely doesn't exceed 1k messages/sec?
Very nice article explaining SWIFT and some other things.
Being from a country no one gives a fuck about, I have experienced the sort of "discrimination" described many times. Banks, ISPs, stores, local ad users would just refuse to sell to me. It's a sad reality, but a reality nonetheless.
I still remember a needlessly lengthy email from an incorporation service explaining to me the difference between "lawyer" and "attorney". Seeing as I learned English from TV shows and the Internet... I still don't get why using the word "lawyer" got them so offended :D
I agree with them just being an asshole. A lawyer is someone with a JD. An attorney is someone licensed to practice law. For a lay person, I don't think it's at all inappropriate to conflate the two, and giving them crap about it is definitely an asshole move.
Fwiw, as married to someone awaiting character and fitness confirmation from 2nd department of New York State - you cannot declare or imply that you are a lawyer, attorney or otherwise able to practice law until duly licensed and sworn in. While Websters says a lawyer includes those that study law, putting that in your email footer is a great way to never be barred.
I think actually it does: the original meaning of "attorney" was someone who was appointed to act for you or on your behalf. An attorney at law does that when you need legal representation. Someone with a power of attorney does that in other areas, such as finances.
And if any one ever claims they haven't found any useful purpose for cryptocurrency, the answer is here. The most valuable use-case for cryptocurrency is to financially empower people in predicaments like yours.
A permissioned value transfer network, like the traditional financial system, poses problems that blockchain-based finance doesn't suffer from, and the trade-offs in using it are worth it for some people.
Huh, I honestly never looked at it that way. OK, let's say I accept crypto as payments... I still need to convert it to "real" currency if I want to pay for food, housing, insurance, parts, tools, pretty much anything...
I guess that's the biggest problem with it, there's not enough people using it for "real world" transactions.
> “Sorry, you have citizenship from the High Risk Country list, accordingly I’m not allowed to open this account for you. This is a commercial decision of the bank and will not be reversed.”
This sounds like what I heard from a lot of non-US financial companies when I used to be American and then didn't want to open accounts. Frustrating but predictable and probably intended outcome from regulator behavior.
- "you have a niche web browser which breaks our js fingerprinting so screw you"
- "you had a dispute on your airbnb account and we don't have time to figure out whether you or the host are wrong so we'll just kick you both off"
If that sounds shitty, we also have:
- Another company had marked you as risky, and since we trade risk profiles with each other, we just don't want to deal with you.
Except in most cases you won't ever learn the reason, much less have a fair appeals process.
I have a feeling we have a LOT more of this than people think already, but companies aren't talking about it and it's not regulated except for a few sectors. In the future though, it'll be a lot more. With the expansion of tracking, we're gonna get a LOT more persona non grata/shadowbanning and social credit systems.
You are effectively limited to the few large banks that can handle the red tape. It wasn't designed to make US persons' life abroad miserable, even if it did succeed handily to the point some US citizens are opting to renounce their citizenship rather than keep enduring the pain. The intent was to make the IRS' compliance processes easier. The level of detail in the FinCEN reporting Americans with financial assets abroad has also dramatically risen in the last 20 years. It used to be you just sent a list of banks along with whether your assets there exceed $10,000 or not, now you have to send a detailed summary with a max account balance (adjusted for exchange rate).
See FACTA. If an overseas bank (say in Australia) open an account for a US citizen, subject to US IRS taxes, then they have US regulations to comply with for not just that account.
FACTA requires an overseas bank to identify US account holders and then report their personal and other details to the IRS, including balances and withdrawals.
So now some bank in a foreign country has to not only do due diligence on you and as soon as you say you are a US taxpayer or there are signs you are, it is required to report your account to the IRS, and if it doesn't it's subject to a 30% withholding tax on transfers to it as an institution from the US.
Of course, under the rules, it's up to the bank to be careful, but the local tax authority doesn't care, so often there's a "Don't Ask, Don't Tell" sort of attitude.
Personal anecdote: I was the manager of a small investment fund that invested in a YC company that was acquired by an Australian company. As a result we ended up owning some stock in this Australian company. In order to sell this stock and cash out, I had to open up a brokerage account for the fund (which was an LLC) in Australia. Very long story short: it was a freakin' nightmare. It took six months. All to sell some shares in a public company.
This is a great overview. They seem to be implying that banks that are otherwise not required to abide by sanctions (say, one located in China) can easily bypass SWIFT restrictions and transact with the affected Russian banks directly. How true is this part in practice?
I'm going to ignore the last bit since that is tangential to the topic and ripe for starting a flame war.
> If they’re settling in rubles or yuan, for most definitions of “easily,” yes.
Completely agree with your comment, just wanted to add that the vast majority of international companies will require a settlement in DM currencies (mainly dollar). This ensures that the relative size of the deal stays stable, as these currencies are highly stable and not subject to domestic manipulation. For a deal to be settled in, say, yuan, you would have to be pretty darn sure that your exposure to yuan is highly predominant: your in/outflows will be yuan-relative.
yuan is highly stable over the past 2 decades, in fact it gained about 20% on the dollar over that time frame.
The problem with Yuan are more with its low convertibility (read: usage rate outside China), but that may change eventually. Using currency sanctions to achieve political goals are simultaneously expending trust in those currencies.
Not to put too fine a point on it, but the reason the US Federal Reserve exists is to "manipulate" the dollar.
Personally, I've always liked Singapore's approach of anchoring the Singapore dollar to a basket of major currencies. However, they also give themselves leeway by not publishing the basket's constituents or weightings, meaning they can still make the dollar dance by tweaking those.
Using a negative interest rate to reduce the miney supply is a much better idea than using a peg. To be fair you can do both. A negative interest rate is a speculators nightmare.
I thought that because Singapore is primarily a market/port economy, having its currency pegged against a basket that covers the majority of its trade weightings would help it withstand dramatic movements in individual currency swap rates with the Singapore dollar.
Rather you 'can* trust China to manipulate it when needed, they need the currency to serve specific macroeconomic policy decisions and they will use the levers on their power to achieve it, the fact that western speculators might get burned for it is not a core government interest at this time, maybe in the future
Can you truly call them stable with 7+% official inflation, negative real interest rates, and China owning 3+ trillion USD-nominated assets, which it probably will start to gradually sell in the wake of sanctions against the Central Bank of Russia?
None of these factors, other than inflation, point to instability. With respect to inflation, that’s being directly addressed.
Compared to every other currency, historical and extant, the major trading currencies of the day are highly stable across multiples of even the longest transaction time frames. They aren’t good long-term stores of value because that’s not what they’re built for.
> With respect to inflation, that’s being directly addressed.
Please explain. I don’t understand how that’s true.
In last night’s SOTU President Biden said inflation was mostly due to car prices or something equally silly. I don’t see any nation seriously addressing inflation which is officially 7.5% but I believe to be much higher for most.
What if I told you that multiple 0.25% interest rate hikes are unlikely to meaningfully counter 7.5% inflation?
The last time the US had inflation this high Volcker had to raise rates to double-digits in order to break the back of inflation.
Also, don't forget that 20% of all USD ever printed were printed in the past year and the Fed has made no claims that they plan to taper the money printer anytime soon.
The 7% inflation number is measured as an increase in prices in consumer goods. Used car prices are up >30% and are a significant piece of consumer spending.
Perhaps because the demand for vehicles post COVID is exceeding supply.
However, is it just drawing forward future demand, which would mean the inflation is temporary?
I mean after a 2 year recession caused by the pandemic, in terms of large consumer items, like vehicles, you'd expect that. People want/need to start travelling again.
Why does settling in dollars make any difference? Like he said, if the SWIFT secure messaging service goes down, someone at a bank in Japan has the phone number of someone at a bank in New York and can "wire" money with a phone call instead of sending a SWIFT message. Wires will be orders of magnitude slower, but money is not frozen. And the real effect is that someone in Mumbai receiving a phone call from a Russian bank today will be especially careful to cross every T and dot every I.
Because every single transaction in USD must result in a credit and debit to an account at the US Federal Reserve (except for transactions entirely in paper money -- this is the reason drug dealers like paper money.) For a transaction denominated Yuan(Renminbi) that transaction must eventually result in a debit and credit entry at the People's Bank of China (the central bank of China). In the latter case no US entity need be involved. The problem with the second transaction is that fewer people are willing transact in Yuan than are willing transact in USD. That is changing though, and quite rapidly. Many countries have switched to trading with Russia in other currencies. For example the Indian government purchases military equipment from Russia using the INR currency and therefore, its payment for such equipment does not flow through any US-connected financial system. The US can still stop such transactions though, through other forms of economic pressure: CAATSA regulation for example. Which is why India is particularly concerned about the Russia/Ukraine conflict. IF the US sanctions India through CAATSA to block it from purchasing Russian military equipment, India will be severely hurt and unable to defend itself against China (one of its two primary security concerns.) So bottom line, one can transact outside of the US financial system, but that is significantly less useful, and also does not mean that the US cannot stop such transactions. In the end the thing that enables the US to affect what other countries do, is the absolutely massive size of its economy relative to others and the absolute dominance of its military relative to that of others. As long as it maintains those two advantages, it will be able cripple any other country -- either through war or economic sanctions.
Yup. You are right. In this case the US Treasury has frozen the account of the the Central Bank of the Russian Federation(CBR) holds with it. So the CBR cannot transact in USD, and in turn any Russian Bank relying on the CBR providing dollars for purchases of foreign goods and services will not be able transact through that route. It is not exclusion from SWIFT itself that is causing difficulties for Russia in this case, but freezing of the CBRs account with the Fed.
However, transacting through the route that goes from consumer -> Russian Bank -> CBR -> Fed -> US Bank -> US merchant (or in the reverse direction) is not the only route. A Russian bank could also transact with a correspondent bank in another country that transacts with a US bank that transacts with the Fed. So the following transaction might still be possible: consumer -> VTB (Russian bank) -> ABN Amro (dutch bank) -> Citi (US bank) -> Fed -> Bank of America -> US merchant. In fact this is probably the more common path (except VTB might have directly transacted with Citi before last week).
The easiest way to stop these other routes is to ban all Russian Banks from the SWIFT system. This is because pretty much every US bank uses SWIFT to serve as the messaging platform by which they transact with correspondent banks (And they will NOT use any other system -- because of US regulations). So simply preventing SWIFT messaging for all Russian banks makes it enormously difficult for Russian Banks to transact in USD.
Hence the emphasis on blocking SWIFT.
But it is not the end of the world for Russia. They still have three avenues for international trade:
1. Trade in another currency, preferably of a country that is less susceptible to US pressure (e.g. China, and eventually their own) This avoids SWIFT, the US Fed and US controllable financial entities altogether.
2. Use proxies. Have an entity located in another country trade in USD on behalf of a Russian entity. It is usual to keep such proxy relationships secret. However, should US govt. discover the proxy aiding a sanctioned entity, they may sanction the proxy itself, and the jurisdiction in which the proxy does business. So this method of transacting is risky for many entities (both banks and other non-financial entities.) So most won't do it. But some will.
3. Barter. This is not as ridiculous as it sounds. For example India had to use this system to buy critically needed oil from Iran, initially, after the latter was banned from SWIFT. For a very large country like India or (especially) China, that domestically produce a very wide range of goods and services, it can be very viable way to trade. But it is still limiting. Both countries have since moved to their own SWIFT like systems to trade with Iran. But of course, one cannot buy US produced (or more generally western goods) this way. So no iPhones.
Thanks for that explanation, clearly separates the action of disconnecting from SWIFT, from the act of the Fed freezing the accounts of the CBR.
I take it that it means there's an account in the Fed that says the CBR has a credit of $650B with it, but it refuses to accept any transactions against that account. So the money is still "there", just can't move.
Exactly. It's probably nowhere near as large as $650B though. It is somewhat more complicated than that.
First off, only a fraction of the CBRs reserves are held as US dollar denominated holdings. Most central banks hold a variety of assets (currencies and gold) to diversify currency risk (and in the case of the CBR sanctions risk)
Secondly, even most of the USD holding are not held as actual deposits at the Fed. For one thing, Fed deposits do not pay interest. There are also relatively illiquid (even if we don't consider sanctions.)
Instead dollar holdings are held as US Treasury bonds. The US Treasury bond market is the largest financial market in the world and extremely liquid. And treasury bonds do pay a small interest. A US treasury bond is the closest thing to being an actual dollar without actually being a currency.
These bonds are held in the bond market accounts of large US and foreign banks. These accounts are frozen too.
However, because US treasury bonds need not be held directly, the vast bulk of the CBRs dollar denominated holdings are probably not directly held by it and so harder to trace. Indeed, only the CBR will know exactly how much USD denominated holdings it actually has.
> Because every single transaction in USD must result in a credit and debit to an account at the US Federal Reserve
Are you sure about that? How about USD accounts outside America, commonly known as Eurodollars? Ultimately those dollars originally came from the Fed but they are effectively outside their control.
Eurodollar accounts are essentially deposit accounts at a non-US bank denominated in USD. They are, as are all deposit accounts, debt instruments issued by that bank.
These accounts, as you point out, are not subject to US regulations in the sense that US laws regarding bank deposits need not be complied with. A domestic USD checking account at Bank of America is regulated by the FDIC with insurance against fraud etc. For Eurodollar accounts these protections don't apply. (Other protections provided by their home-country laws might apply though.)
However, if you were to actually try to transact in USD with that account, the transaction path would still touch an institution that has an account with the Fed. And hence be controllable by the US government.
For example if you were to withdraw $50 in cash from your eurodollar account, the bank would still have to purchase the dollars (or more generally acquire them in some way) to give them to you. They cannot print the dollars themselves. The same thing applies to electronic transactions, except that now, there will be a corresponding set entires in the electronic ledgers of some US bank that has an account with the Fed.
So for the purposes of sanctions-busting, Eurodollar accounts are no good.
Eurodollar accounts are, of course, extremely useful for international trade. Most exporters will need a Eurodollar account to keep transaction costs low. Expats often hold a Eurodollar account with banks in their home countries to insulate them from exchange rate risk. There are a myriad other uses. But evading sanctions is not one of them.
> someone at a bank in Japan has the phone number of someone at a bank in New York and can "wire" money with a phone call instead of sending a SWIFT message
Wires, as the article explains, are just debits and credits. And all non-paper debits and credits of dollars are ultimately governed by the banks’ credits and debits with the Fed. So no, you can’t wire dollars with a phone number if the other side is sanctioned. You can if they’re off SWIFT, but you need someone with an account at the Fed to make those changes.
What about just... not settling. Like instead, just keep track of which sides owes the other how many dollars, and ensure it doesn't get crazy imbalanced. Or very similarly transact in dollar denominated Chinese/Russian issued bonds.
Kind of like bartering. India and Iran did something like that, when Iran was sanctioned. Both India and Iran kept track of their foreign trades and issued payment locally. India is also going to do something like that with Russia, if sanctions increase.
I've just had to install several different VPNs until I've found one that offers a Russian endpoint, in order to get account statements from Russian banks. Which I need to comply with IRS regulation to disclose my foreign accounts as a part of U.S. yearly tax report.
Not all banks are affected, only the most popular ones, it seems (e.g. VTB, Open).
All of them, including the "unavailable" ones, still have USD and EUR transfer options open to use, not sure if they are SWIFT-based or using something else now.
I don't know what's going on, perhaps DDoS from Anonymous or an overreaction from the banks themselves, but I'm pretty sure Putin hasn't even noticed this unavailability. Are they sure they know what they're doing?
Unfortunately (for me), "USD and EUR transfer options open to use" does not equal "you can send or receive USD or EUR to your account in a Russian bank".
In the past week I myself and many people I know were not able to receive a USD wire from US to their accounts in different Russian banks, none of which are even in the list of sanctioned entities (Tinkoff and Avangard banks are the most common example). In all these cases the transfer was declined by a US bank, probably due to compliance considerations. Sending USD or EUR outside doesn't work either, and in some cases you cannot even exchange the remaining USD on your account to RUB. The options are indeed available in the bank's web or mobile application, but clicking 'Send' just gives you a 'something went wrong' error and that's it.
It is true that Putin might be not noticing any inconvenience, just as most employees of state-owned companies (who happen to be the core Putin supporters), but people who rely on international payments for living (who happen to be the least loyal to Putin part of the population) are being severely hit by the sanctions and have spent the last week in the state of permanent panic trying to figure out what are the remaining options they have and how they'll pay their expenses in a month from now.
Yes, that's what we ended up with. It required a lot of hassle on the side of the sender because it wasn't clear what tax and liability risks this involves for a US company to send a crypto payment. But it worked and I really appreciate they were willing to help me. Not sure if a lot of companies are willing to go great lengths to get their Russian employees paid in this situation...
Also, got bless crypto currencies! It would be not that easy to shut down P2P withdrawals until the internet is working at all. I have to admit, I was a big crypto sceptic right until the moment it became the only way to get paid. Now I'm a believer!
I had a similar moment :) If you have a good on/off-ramp it's quicker, cheaper, and just as easy for international payments that go through different banking systems. I wish all the hype around speculative trading of NFTs and 'Web3' would die for a while so we can finish building the actually awesome parts like financial accessibility.
For those saying that crypto is useless, here is a great use case. Authoritarian governments are currently preventing individuals from moving their property across borders. Crypto fixes that.
It's not just "authoritarian governments" but rather "governments" in general, unless you consider the EU government to be authoritarian. And circumventing the law has always been the prime use case for crypto since the beginning. I think everyone has always agreed that it's great for that.
> And circumventing the law has always been the prime use case for crypto since the beginning. I think everyone has always agreed that it's great for that.
Absolutely. Even the criminals, scammers and extremists using Signal and its E2EE also use it to communicate with each other whilst sending/receiving funds via a private cryptocurrency called 'MobileCoin' which uses an encrypted blockchain and all transactions are untraceable and scrambled. Even they would agree.
Got to thank Moxie and his friends for creating a great tool used and adored by many criminal masterminds all around the world. /s
You know, security either works for everyone including undesirables, or for no one. There's no such thing as technology or mathematics that only works for good guys; this is where sufficiently advanced technology and magic diverge.
When most people say "crypto is useless", that is rarely about BTC being used as a currency, and is more about everything else in crypto (NFTs, web3, smart contracts, decentralized apps, ICOs, etc). The idea of a currency which has value because people give it value makes sense, regardless of how speculative it is.
People have been saying "crypto is useless" for wayyy longer than the time since NFTs were first popularized (which didn't become a mainstream term until 2020/2021).
Totally - the conversation definitely has shifted in general in Bitcoin's favor since it's launch.
My only point was, whatever comments people are making in the past few years which fit under the umbrella of "For those saying that crypto is useless", it feels like those have been directed at all the other stuff in the eco-system - while "moving their property across borders" is something which was solved by Bitcoin along time ago.
People pretty regularly say its useless in this sense as well. But even if it were true, as soon as you accept crypto is useful as money, DeFi smart contracts are pretty obviously useful as financial infrastructure on top of it.
Sorry, I was being a bit quick when I typed that out. I wasn't trying to define why it has value per-se, I was trying to make the distinction that someone who says "BTC is very speculative, therefore its too risky for me" (ie: a hater) is not the same as "it's useless".
But the catch-22 is that, if it actually becomes popular for fixing the problem of currency controls and sanction lists, governments have the ability to impose a lot more control on crypto exchanges to prevent this kind of use.
Maybe at that point there would be two worlds of crypto: you can trade it on the above-the-board exchanges, but can’t move those coins out onto the blockchain in any meaningful amounts. Or you can have it on the blockchain, but you can’t convert it to USD/EUR in any meaningful amounts unless you find a private buyer.
In fact these separate worlds already exist — it’s not like most Coinbase users ever interact with the actual chains, they just trade inside Coinbase’s SQL database. But a lot of the appeal of crypto is about theoretical possibilities, and government regulation can put a real damper on that enthusiasm.
Yes, if crypto actually became popular for international money transfers, it seems almost inevitable that it would acquire the same kind of regulatory regime that already exists for Western currencies. The exchanges can be compelled either directly or by choking their banking relationships.
As I've seen pointed out on crypto Twitter, the net effect of a public blockchain ala Bitcoin is that the actions of large whale accounts(hence oligarchs etc.) are highly visible and constitute prizeworthy targets for everyone who wants to take a shot(regulators, thieves, etc). Small accounts and transactions don't raise the same level of alarm. While you can try to spread out your balance among many wallets and small movements, that makes it logistically difficult to move money - more seeds to store and track, more transactions taking place, lower liquidity. People who succeed in grand on-chain heists have trouble doing anything with it...because everyone knows.
So Bitcoin therefore ends up being more useful to ordinary Russian citizens under sanctions than it does for oligarchical, globe-spanning wealth; the exchanges hold a similar role to the banks and can be brought to heel, but at a small scale you can self-bank. There's always a leak in the system because of this, even if you brought down the hammer on every exchange. Destroy Bitcoin and it'll just mushroom up again in some other form.
Crypto is game-theoretically useful even to elites who suspect they're under threat of being frozen out; they might not be able to keep 100% of what they have, but even 0.1% of vast riches is enough to sustain a comfortable life for some time. And if they lobby to keep exchanges open, they have the possibility of keeping more. This explains why there hasn't been a strong global consensus on crypto yet.
This seems rather naïve. If you can't leave a country because your government requires you to fight a war rather than leave, how do you get yourself, or any physical property, out? If you're in jail, justified or not, how does crypto help you move your property? Or the government you live under simply doesn't allow exiting? What if all international airports refuse to allow flights originating in your country to land, and trains and roads and ships are far beyond capacity? Even your intangible crypto wealth can't be moved across borders, if you yourself aren't able to cross a border.
There are plenty of cases where you can leave a country, but not with large amount of cash or gold. Like nowadays in Russia. Crypto allows you leave with your property in these cases.
You just wrote the same thing SamReid did. Yes, of course, in some cases, crypto can help. There is a very wide gap between that, and the parent poster's declaration "crypto fixes that" like it is a failsafe cure-all.
I was presupposing you can get yourself out. If you can't physically leave the country, owning crypto will not help you much, except perhaps to bribe some corrupt official who could smuggle you out. Similarly, if the electric grid goes down, if there is a nuclear war, or if a gamma ray burst causes a mass extinction, we will have other things to worry about. Crypto is not a magic bullet for all the scenarios you can think of, but it can help most cases.
Like most things crypto, the initial promise is that is fixes everything (like you initially wrote), but when you dig into it, the reality is that it's often not cheap, often not quick, often not portable, often not anonymous, often not safe, often not unrestricted from confiscation. And it introduces all kinds of concerns as well: losing keys, fraud, insecure wallets, exchanges that lose your funds, ransomware, etc
Crypto has utility, yes. But it is far from a panacea and actually does not "fix" many of the problems its supporters claim it does.
Yes, I agree, it certain situations, under certain circumstances, it helps. But the parent comment was "Crypto fixes that", as if it universally removes all barriers and obstacles, which it most definitely does not.
I would also pose a question, in the case where you have to leave NOW in order to cross that border -- would you rather have all your money in a bank with accounts currently frozen, or have crypto keys stored physically in an apartment or bank in an active war zone that you are unable to reach and faces a real possibility of being destroyed/bombed/flattened at any moment?
It's an interesting question, and it might depend on what currency the money is denominated in, or what bank. I don't know how I'd manage crypto keys, but it is possible to reduce all your holdings to a 20-word passphrase that you've memorized. So there is the question of whether I've already prepared to bug out. At least for myself, if I fled the country, I don't have any valuable physical property I'd ordinarily take with me when moving, except for a GDM-FW900.
But it does not - or, to the extent that it does, it only does as a yet-unclosed loophole.
If crypto is not currency, it needs to be converted to currency before use and as such can trivially be blocked with KYC rules at conversion.
If crypto desires to be a serious currency, it needs to greatly improve efficiency and stop being deflationary.
(Funnily enough, Tesla accepts dogecoin but not USDT, so maybe I am wrong with the second requirement; but maybe not - it's likely just a gimmick in this case)
Thing is, there are, and will probably always be, enough purely criminal uses for money, where KYC is not a thing, that use of crypto for non-criminal purposes will be able to work too: criminals will function as "entry and exit nodes" between cash and fiat, and between them, legit users will just operate with crypto.
Fiat is based on people's trust with governments. Crypto is based on people's distrust with governments...
If you're relying on criminals you already have excluded widespread/mainstream use.
The question is not if "crypto is a novelty that enables some people to go around some laws" - everybody can readily agree to that. The question is whether it is a systemic force/ agent of change, that can e.g. prevent enforcement of some kind of laws forever and thus have long-lasting societal impact. I think the jury is very much out on that. (and no, you can't rely on criminals as exit nodes if you claim to be an unstoppable agent of change)
Crypto is infinitely divisible, and because of lack of physicality it does not really suffer from lack of liquidity on the same sense that you can't cut a 20usd bill in half to pay a 10usd item, you just swipe with your phone or wherever e-wallet you use
The deflationary bit, is sort of a problem on the centralization of wealth yeah, but that's a macro problem, not a barrier of entry to individuals
I think that your comment tries to take digs at Crypto in an overly contrarian way, Crypto is digital gold which can be easily hidden, I guess that you could buy a bunch of paper Swiss bonds hide them on a bag or whatever and take a flight with these, but that already has a higher barrier of entry than buying wherever amount you want on ether and put it on a thumb drive, I guess both methods could work, certainly both are easier and sneakier than carrying a brick of gold around on your flight luggage
Liquidity has nothing to do with divisibility. Liquidity is the ease with which an asset can be turned into money. By definition, money is the most liquid asset.
I don't get divisibility argumebt. Why woukd anyonce care if their Bitcoin can be divided if they owe 0.0001 Bitcoin and Bitcoin suddenly doubled in value which doubled the amount of money they owe without giving consent to owe more money. It is kinda like someone used a technological defect to justify a non negotiated contract change. The person who promised a certain amount of debt obviously promised the earnings of a fragment of their talents. The volatility of the currency does not affect their talents.
How does 0.0001 BTC "suddenly double in value" to be 0.0002 BTC?
What you're actually saying it suddenly doubles in value when converted to another currency.
Just the same as if I owe someone $10, in the same currency, then it doesn't matter if the ratio of the dollar to the ruble doubles or triples at the same time. It's still $10 to both of the parties.
They're not preventing movement of physical currency - they are preventing use of the existing network and systems to easily move debts around so that it is exceedingly difficult and you have to move physical currency instead of bits / IOUs.
Maybe a distinction without a difference to some, but it makes sense that a country that bucks the consensus of a number of member nations would be excluded from a consortium of institutions like this. (Leaving discussion of disparate impact and whether this actually achieves national goals for another forum)
I don't personally see a huge distinction between crypto and global banking. Just a different set of ledger-holders. Miners, instead of institutions. Just because it's a different set of folks controlling the ledger doesn't mean this can't happen with a blockchain. Maybe I missed something and the tech prevents this somehow? But not that I've been able to figure out.
The main difference I can see is that the Fed controls the dollar. It is the central account holder.
Miners are distributed and there is the well known problem of 51% of the mining pool being controlled by a single party, but they would have to control 100% of the mining pool to be the equivalent of the Fed.
The dollar is only one currency. SWIFT is the network that allows transactions in multiple currencies across banks easily. There are a huge number of sovereign currencies in the world that you can buy things with, not just one. Probably more central banks than there are large mining pools.
If mining pools conspired to, say, fork a chain because somebody stole a lot of tokens due to a bug, it amounts to the same kind of control.
This seems like the very essence of money transfer without using the Western banking system, and it's a system that's been around for probably over a thousand years:
Hawala is literally the opposite of crypto because it’s entirely about trust and has the same issues of external pressure modern banking has to stop transactions that crypto doesn’t
I don't see how they are alternatives to each other, because crypto doesn't perform the same function. It's only marketed that way.
You can be sure a system like Hawala works because actual terrorists have used it forever. Like Toyota pickup trucks.
There are notorious pictures of Toyota pickups with frames that have broken in half. Since they have "issues" does it mean insurgents should drive Teslas instead?
This post knows nothing about the subject it talks about.
Reads like "Russia stronk, Russia do not care" kind of propaganda, SWIFT is exclusively used for wire transfers and exclusion from it leaves companies to conduct their business via Cash-only, just look at the Iran, they only trade with cash when it comes to exports/imports.
Assuming the amount of a given currency does not decrease or leave its country, does this mean that when you “send money internationally” it is just switching owners in the same country?
So the money does not leave, new owners come into the country and control its flow?
Depending on how you look at it, almost all currency (in the form of bank deposits) never leaves its home country/region at all.
Most reserves (which are needed for interbank settlement) are accounting entries at a central bank these days, and only domestically/regionally licensed banks are usually allowed to hold central bank accounts.
One big exception are foreign-controlled subsidiaries of large foreign banks, but even these are subject to local laws and regulations, in particular sanctions enforcement.
When you hold a foreign currency account at your regional bank, this amounts to a claim in the amount of your balance against them, which is only indirectly backed by your bank‘s claim against its correspondent in the country where your currency‘s central bank is located.
In the financial world, centralized decisions followed by decentralized responsibility is extremely common. If you are international and operate between 3-5 countries that don't necessarily like each other at all times a great tool, something about some kind of coin, that lets you actually control a store of value, and get around what banks as well as governments think, came out in early 2009.
Cefi is great. It's fast, it's secure, you are protected from loss up to a certain degree, it's often cheaper than blockchain transaction fees, etc. But it's just a tool with tradeoffs, much like Defi.
> When you move money domestically, your bank and the recipient’s bank use some intermediary system to coordinate a series of agreements which result in your bank agreeing it owes you less than it did prior and the recipient’s bank agreeing that it owes the recipient more than it did previously.
I just don't understand the reason to leave out central bank in these discussions. Yes there's all those agreements, payment rails and so on. However if you look past all that inter-bank transfer results in banks' central-bank reserves getting changed. Let me elaborate.
Banks Foo and Bar have accounts with central bank. When I Transfer USD 100 from my account at Foo to my friend's account at Bar the central bank does -100 to Foo's reserve balance and +100 to Bar's reserve balance. For more details please read this terrific, short and succinct book "Central Banking 101"[1]
International wires, however is a different matter. You have FX market, correspondence banking and what not. But when it comes to moving USD around the NY Fed has absolute and total control over clearance. Any bank that hold USD deposits must have corresponding reserve account with NY Fed. So regardless if SWIFT or any other form of wire transfer, NY Fed can cripple a bank's operations by freezing their reserves. Here's a relevant sanction announced by the US Treasury a week ago [2]. And here's the relevant section.
"Treasury is taking unprecedented action against Russia’s two largest financial institutions, Public Joint Stock Company Sberbank of Russia (Sberbank)and VTB Bank Public Joint Stock Company (VTB Bank), drastically altering their fundamental ability to operate. On a daily basis, Russian financial institutions conduct about $46 billion worth of foreign exchange transactions globally, 80 percent of which are in U.S. dollars. The vast majority of those transactions will now be disrupted. By cutting off Russia’s two largest banks — which combined make up more than half of the total banking system in Russia by asset value — from processing payments through the U.S. financial system. The Russian financial institutions subject to today’s action can no longer benefit from the remarkable reach, efficiency, and security of the U.S. financial system."
Of course they could continue to transfer money through correspondence banks etc., however their existing USD reserves are frozen.
Last time I sent money to someone internationally Etherium really was pretty convenient. The Coinbase fees were a little high but otherwise it was near instantaneous, I already had some anyway, and I didn't have to deal with any real hassle.
Crypto is a planet-destroying ponzi-scheme, but in a collapsed economy like Russia, I wonder if everyone can just have virtual wallets where you can buy goods by sending the seller some "coins". Which is basically the WeChat payment system, or how the Brazilian Real got established: https://www.npr.org/sections/money/2010/10/04/130329523/how-...
We already just exchange "coins" electronically, but with the Visa or MasterCard network getting involved...
The phrase "ponzi scheme" has been thrown around liberally in regards to cryptocurrency, especially on this forum, but I've never heard a convincing argument that it actually fits the definition.
It's weird because it seems like you can point to various aspects of crypto and maybe identify them as being a pyramid scheme, but I don't feel like that definition holds up as it gets sufficiently large and self sustaining. Otherwise you could point to a number of other very large money machines like the stock market or even money itself and say it is also a pyramid scheme. Maybe it is though. Perhaps the entire economy is a pyramid scheme that is dependent on an infinitely growing population.
As soon as we hit a population limit on the planet there will be no bigger fool to sell to in the future and the economy becomes stagnant.
As for the literal definition of ponzi scheme I don't think it holds up because everyone is fully aware, or should be of what it is they are buying and where the money is coming from if they want to sell.
The same can be said of any startups. They are pyramid schemes until they finally offer utility to customers.
What is sometimes up for debate is whether something is serious utility, such as “owning” a picture anyone can look at, or a digital experience in the metaverse with artificial scarcity.
But then again, under the capitalist system, we need to introduce scarcity even where it’s not easy to do so, in order to recoup initial venture capital. So for example, I remember stories about SWAT teams raising grandmas for downloading movies illegally, or about manufacturing companies all forced to cripple their software with DRM, or the blowup at the W3C, or crackz of popular software that kiddies handed out until all these companies like Adobe went full SAAS. It’s an antipattern that is the direct result of any capitalist system.
By contrast, open source, creative commons etc. doesn’t have that issue.
"Bitcoin doesn’t really meet this broader definition of a Ponzi scheme any more than the gold market, the global fiat banking system, or less liquid markets like fine art, fine wine, collectable cars, or beachfront property. In other words, if your definition of something is so broad that it includes every non-cashflow store of value, you need a better definition."
You know they'd have a point if they were talking about Bitcoin and gold, but they're not - because if you don't get understand what underpins the value of fiat, or pretend it's the same - then you have an agenda to push.
Fiat has value because it's legally recognized by governments that issue it: it extinguishes tax and debt obligations in those jurisdictions. This makes it markedly different to any other of the commodity items listed: my government will only ever tax me fiat currency, which is sufficient to extinguish those taxes and fulfill debts. I can't be ordered to pay them in gold, or bitcoin.
Imagine if every merchant came up with their own currency and forced you to pay them in it only. Wouldn't a global currency be a lot more efficient & frictionless?
As soon as I hear something like “planet destroying” within the crypto context, I stop reading because that tells me the person knows nothing about the current state of crypto.
I'm curious about this, I try to stay up on what's going on in the crypto world and it's my understanding that the vast majority of crypto blockchains are still using proof-of-work, which is what I imagine "planet destroying" is in reference to.
The biggest proof-of-stake blockchains by market capitalization in 2021 were Cardano, Avalanche, Polkadot and Solana. Other prominent PoS platforms include Tron, EOS, Algorand, and Tezos.
There have been repeated proposals for Ethereum to switch from a PoW to PoS mechanism. In April 2021, the Ethereum Foundation announced that it planned to switch to a PoS system by the end of 2021. This has since been pushed back to the second quarter of 2022.
---
So if most of crypto transactions are conducted on proof-of-work chains, which do require burning large amounts of electricity, why would this make you think someone doesn't know about the current state of crypto. What exactly about the current state of crypto is incompatible with this critique?
>>What exactly about the current state of crypto is incompatible with this critique?
Ethereum is by far the most widely used cryptocurrency network, and while it consumes a lot of energy relative to the number of transactions in processes, and a lot of energy in absolute terms, it consumes on the order of a thousandths (0.1%) of the world's energy output.
It will have switched to Proof of Stake long before it grows large enough for it to account for a materially significant portion of global energy consumption. So the rhetoric used above, which makes the generalization that "Crypto is a planet-destroying ponzi-scheme", is entirely hyperbolic with respect to the environmental criticism (and a blatant mischaracterization with respect to the ponzi-scheme allegation).
Ethereum is now estimated to consume energy equivalent to or greater than mid-sized countries like Greece[1]. You can paint it as tiny, but 0.1% of world energy output is still enormous, for providing what is for the most part a highly speculative set of financial instruments to a limited audience.
It's been "about to go PoS" for several years now. The fact is it hasn't. When it does, you can tell people their concerns are out of date. About Ethereum. Bitcoin isn't even going there and its consumption is as bad or worse.
I don't disagree with most of your comment, but I do want to point out that the code to power Ethereum's switch to PoS is actually built out now and is in its final stages of testing. The latest Kiln test network is effectively a release candidate. At no point in the past several years has that been true, so it's comparing apples to oranges to say it's been "about to go" for that long.
I will welcome it when it does, don't get me wrong. That honestly removes a major issue I have with cryptocurrency (at least with Ether, anyway). There are a host of more theoretical reasons I'm not buying into the ecosystem, but remove that negative externality and hey - you do you, not my bag but you aren't hurting others.
I'm sure it is closer than ever, if it wasn't then there's something wrong with the development process! I sincerely wish the various people involved good luck in this venture and a speedy success in moving it to production. In the mean time I'm still going to get pissed off at people saying that energy concerns are outdated, especially when they're referring to the whole cryptocurrency ecosystem.
Don't forget that traditional banks consume lots of energy as well. Their armies of employees and tellers are required to drive an hour or so every day, they maintain tons of physical buildings, truck around piles of physical currency etc. Traditional fiat is given legitimacy based on government's monopoly on violence inside their borders which often result in wars. Nothing is free and I'm fairly certain that crypto will end in less energy consumption, not more.
Exactly. Proof of work is costly in energy and affordable in labor. The energy consumption of labor-intensive industries obfuscates the real energy requirements of those industries, by effectively outsourcing the energy consumption to the workers.
I still prefer Ethereum's variation of Proof of Stake over Proof of Work, but it's by no means clear to me that Proof of Work based blockchains are less resource-efficient than traditional financial systems, and I would wager a comprehensive analysis would show in fact that they have the potential to be vastly more efficient, if they're allowed to scale up their transaction throughput to amortize their energy consumption across
more numerous transactions.
Proof of work does not replace labour though. There is not really an equivalent outlay in tradtional banking. And blockchains don't provide the services that the labor provides in the banking sector.
Proof of work completely replaces the bureaucracy that maintains trust in traditional ledgers..
A bunch of automated nodes, strewn across the globe, and connected via the internet, maintain the network, with the network being able to seamlessly/autonomously manage nodes joining/leaving.
There are no legal contracts that need to be drawn up, filled out and signed for someone to start submitting PoW, or validating and propagating transactions, to the network. There is no HR department. No payroll. Just machines, and a deterministic compensation mechanism, managed by a fault tolerant network of machines.
No offence, but for you to see zero parallels between the contract enforcement that decentralized blockchain-based networks conduct, and the function of traditional legal systems, suggests to me you would benefit from taking your own advice.
0.1% is huge, but in no reasonable terms can it be called "planet destroying", when it's slated to be mostly eliminated within 6 months with the transition to Proof of Stake. The characterization is hyperbole.
As for the transition to PoS, the first phase of the transition was implemented on December 1st, 2020, with the launch of the Proof of Stake Beacon Chain. The Beacon Chain has been running without problems for over a year now.
The testnet for the second phase of ETH2 - which is when the execution chain is merged into the Beacon Chain so that Ethereum can fully switch from PoW to PoS and reduce its energy consumption by 99.95% - was launched on December 20th, 2021:
The difference between now and then is that now Ethereum has had the Proof of Stake Beacon in operation for over a year, and the next phase, which merges the execution chain into the PoS chain already, has a running testnet.
The projections on the completion date of the switch to PoS is now far less speculative / more reliable.
Emissions on a par with Greece. And just for one coin. Ethereum is still going to PoS any day now, totally, just a few months off. Like it has been for several years.
So what is it about "the current state of crypto" that you think you know better than these?
The ETH PoS chain is already in beta with the expectation of transition (the merge) later this year.
BTC mining is creating new business models for renewable energy [0][1], BTC uses less energy than many other activities that don't get the same flack- AC usage, Data Centers, etc [1]
> Finally, if energy is one of your biggest expenses, you're economically incentivized to reduce those costs as much as possible.
Unfortunately, with Bitcoin (and other Proof-of-Work blockchains), the economic incentive is the opposite: to use as much energy as possible, until the return from the block rewards and transaction fees is smaller than the price you pay for that energy. Reducing the energy costs only allows you to use even more energy before reaching that limit, increasing the total costs again.
Pointing desperately at other things doesn't change the argument at all.
> Finally, if energy is one of your biggest expenses, you're economically incentivized to reduce those costs as much as possible.
So? This doesn't make bitcoin clean?
There is already huge demand for clean power in this world, adding to it with PoW systems doesn't actually help, and as we can see by the power plant and by the article linked above about a fall in renewable use in BTC, we're not in the "Bitcoin has incentivised green energy and helped the world get cleaner" stage, we're in the "Bitcoin is adding pressure to an already over-pressurised system and is making the problem worse at a critical time" phase.
Even your own linked article is sub-headed "Cryptocurrency mining has the potential to address the obstacles to more widely adopting renewable energy" - not that it has or is, but that it could.
These pseudo-intellectual economic arguments about "helping the world move to renewables" are tripe.
If your only goal is to send digital value across the planet why would anyone use Ethereum or Bitcoin? There are a ton of alternatives that cost fractions of a penny in transaction fees.
Large cryptocurrencies have more liquidity, meaning it's less likely you'll get large price differences between exchanges in difference countries, and more likely that any given exchange will support trading in that digital currency. For large trades, more liquidity also means less price slippage upon buying or selling the cryptocurrency.
What services are the best for transferring large sums of money cheaply, safely, and quickly? In my experience, you can only choose one. I would prefer to chose two: cheaply and safely. I am not as worried about time. Recommendations?
Which kind of bank transfer are you talking about? A few days ago I got paid through ACH transfer and the transaction took 2 business days to execute, albeit with no transaction fees. Now I'm at the mercy of the bank regarding what I can do with that money.
Compare that with using something like UST (Terra), which took only ~1 minute with a fixed fee of ~1 UST for a similar transaction. I also have total control over my money.
SEPA (instant) transfers between European banks are, as the name suggests, instant. There are also no transaction fees for the users of these transfers. e.g. all major Belgian banks support SEPA instant, so transfers between KBC <-> BNP Paribas <-> ING etc. are instant.
> Now I'm at the mercy of the bank regarding what I can do with that money.
This is going off-topic, but you are with crypto as well. Unless every merchant you use supports your cryptocurrency, you're going to have to convert it back to fiat.
Internationally, between currencies? The best offer I've found for transferring $200,000 USD to AUD is 0.4% ($800). At scale, that's not exactly cheap. I'm referencing the original parent comment which suggests it's possible for fractions of a penny, as I would love to find this service:
> There are a ton of alternatives that cost fractions of a penny in transaction fees.
Algorand, Avalanche, Solana, Cardano and Terra are all cheap and safe, but like that other guy said. I have no idea what kinds of crypto are listed on foreign exchanges. I'd imagine anything sufficiently popular though.
BCH is essentially the same protocol as Bitcoin (BTC), but possibly safer (in that your transaction is never relegated to a 2nd-layer protocol like Lightning, with private nodes) and much cheaper, so if you are familiar with Bitcoin, you don't have to learn a new system or any funny quirks. And it's pretty universally accepted at every exchange and wallet.
Not saying it is better than the other options presented (and definitely not recommending it as an investment) but BCH does work quite well for transacting.
Is it just me or is patio11 becoming more and more full of himself? I used to enjoy his writing a lot, but after joining Stripe it seems that something has changed. "I work for the Internet at Stripe" he says without further explanation. Unless "Internet at Stripe" is some internal Stripe group (then please explain what that is), he should have just written that he works at Stripe, full stop.
Otherwise anyone could say they work "for the internet" just because the service is mostly accessed via the internet, but we don't, because seeing it like that is kind of silly.
I wish he could tone those sentiments down a bit in the future, as otherwise the posts tend to be informative and interesting.
He made a giant ruckus complete with mysterious tweets with hashes of secret documents to claim that Japan was going to have mass casualties from their ostensibly botched covid response.
It's okay to make a giant ruckus about something important that you believe nobody is paying attention to.
And it's okay to be wrong about that.
But it would be nice to see him publicly reckon with how he got it so wrong, and how he's altered how he reasons about the world to avoid getting it that wrong again.
I was thinking about the exact same thing. I lost most respect for him in that fiasco. He even said he'd stake his reputation on it, so I guess it's appropriate.
> I am materially wrong about the most consequential thing I've had to have a view on in 15 years. You should probably degrade your estimate of my ability to think through complex problems.
Until he publicly reckons with how he got it so wrong, and what he's changed about his reasoning process as a result, we should degrade our estimate of his ability to think through complex problems.
Why does he owe you something? Should he similarly find every other topic he's been wrong about and make sure to offer apologies and postmortems on his failures?
The dude works at Stripe, not someplace influencing government or health policies.
He didn't punch a toddler in the face. He was wrong about something in some tweets that probably reached an audience smaller than a mediocre college football game, I don't see how that obligates him to apologize or otherwise prostrate himself.
This discussion itself is of nothing important. However, that doesn't preclude it from being a place where moral relativity exists and can be debated. I am not sure I understand your assumption that the importance of a claim or discussion is related to whether it can be morally judged.
Doesn't mean there's value to it. This is a perfect example of manufactured moral outrage, justified post-hoc.
The onus is on the outrage to justify it, not on the accused to defend against it.
In this context, someone was expecting another person to exhibit a particular response to earn redemption based on an absolutely benign incident. At a certain point, the yelling just becomes tedious and unproductive regardless of the philosophical value of debate and discussion.
"I'm outraged because someone was wrong and no one was hurt and no harm was done" is just hubris.
Well, to bring the concept of "value" into it only drives this further philosophical; I personally consider all debates of moral relativity to hold some inherent value, due to the topic, but I admit some are vacuous nonetheless.
> This is a perfect example of manufactured moral outrage, justified post-hoc.
I don't really understand what is "manufactured" about this. The individual went and published a hefty claim, in the form of a white paper no less, that Japan was about to see a massive outbreak of COVID[0]; they believed so intently in themselves that they were willing to put this content out there and stake some lofty claims on the "work" of the white paper.
Of course those who find the work sloppy and indeed find the conclusions outlined in the paper to have not occurred at all are going to decry the author. It is their inherent right. I will leave it to you to slog through the details of the thing, I personally only joined to wax philosophical about the nature of debate on the internet.
> The onus is on the outrage to justify it, not on the accused to defend against it.
This language is so silly. The numbers forecasted in the paper didn't occur, seems pretty well justified.
> "I'm outraged because someone was wrong and no one was hurt and no harm was done" is just hubris.
Again, your language is very telling of the media you consume, but "no harm was done" is both difficult to quantify and hard to imagine as true if you consider actions of negative moral relativity to be harmful, which is not an unreasonable stance to take against breathlessly whispered, widely published failed psuedoscience.
There is no moral position of substance that you can argue from, where Patrick owes anyone an apology. Dead stop. He's been more than humble enough to publish an admission of error, one for which the original OP was too lazy to look for prior to impugning Patrick for it.
He's not Fauci. He created a bingo card creator and shared the experience and his personal perspective with this community. This does not oblige him to meet everyone's unrealistic expectations of how he should conduct himself.
It says far more about the people caught up in the orbit of his mistake, than he does about him.
> Again, your language is very telling of the media you consume
How do you imagine throwing an ad-hominem was going to help make for a more productive debate?
I’ve scanned that 5 mile long article and can’t find any description of what their predictions where other than “it’s going to be worse than what people are saying in March 2020.” What am I missing?
It's wording that I use on Twitter and similar to convey a sort of nuanced problem: I do a bunch of things professionally. Some subset of those things are work that is traditionally done in industry, and which industry has very simple scripts for, and which would be adequately explained by "$TITLE at Stripe" if I had anything like a legible title.
But I'm also in that vague sphere that is often called "public intellectuals" despite not being in a line of work that traditionally contributes public intellectuals. I don't work for a newspaper, though my writing has run in newspapers. I am not a tenured professor, but some tenured professors seem to think I occasionally understand and explain things worth understanding and explaining.
This is further complicated by "That public intellectual thing is something that is expected of me but in the way that a university expects a professor to conduct scholarship without endorsing all conclusions of it, not like a company expects publicly visible employees to stay relentlessly on-message." And by the fact that everyone expects me to, at some point in the future, continue doing much the same thing while not sitting in the same seat I'm currently sitting in.
That is what I mean by "works for the Internet." Which feels sort of self indulgent, and a bit long, to need to shove into every time I stamp out my disclaimer, so it is here rather than every time I need to stamp out my disclaimer.
I too reread this sentence a few time to try and understand the message. I think that the author is trying to convey that he believes his work has a positive impact to the "global health" of the internet. Although this may come across of "full of himself" I think that it may be more of a positive mindset view of his work. If we can't convince ourselves of the value of our work then how we will ever convince the world?
I think the world would be a better place if you could all truly be this proud of our work. Is there anything we can do to make a material difference here?
I think it's specifically a play on Stripe's mission statement to "increase the GDP of the internet" so in that light he "works for the internet".
I like his writing, but his miss on that Japan covid thing (linked in threads elsewhere) and his knee-jerk (imo, at least overly general) anti-crypto hostility has caused me to down-rank my prior for him a bit.
That said, if you write a lot publicly you're going to be wrong sometimes. I don't expect people to be perfectly consistent or perfectly correct (I'm certainly not).
I also don't care that brilliant people sometimes come off a little abrasively, it's better imo than pseudo-humble crap. I don't even think it really applies to patio11 who comes across earnest and helpful in his writing and goes out of his way to do good (salary negotiation article is still best source on the net, the vaccine availability thing).
No, you've just upped your expectations. Public figures are still humans, with all the flaws and mistakes that come with the experience.
> Unless "Internet at Stripe" is some internal Stripe group
Maybe the generous interpretation is that patio11 knows his audience reaches beyond individuals employed at digital companies, maybe folks in finance or government or education. Stripe isn't a well-known provider in brick-and-mortar, or used by fintech, so on a topic on something like SWIFT it makes sense.
The audience he is aiming at is less judgmental people. If you believe that what you do is consequential you can say that. Obviously if you think your work is basically meaningless you won't talk like you care about it and think that it's important. Adding caveats and explanations that show you're not actually attempting to usurp social status some people may think you're not entitled to can be instrumentally useful but you can also just not engage with these people if you don't need to or you don't find it worth the cost. You don't always need to genuflect to your betters. Sometimes you can just baldly state who you are and what you believe in.
I wouldn’t say that. I think the level of rigor is lower than earlier writing, but the voice is the same. Then again more recent topics are more complex.
Well, if it seems that more and more people are becoming full of themselves and it affects your mental state, I'd recommend changing your own attitude towards it. You can only change yourself, not other people.
I don't even understand what this criticism means. Does joking about his job title somehow mean he's full of himself? Would it be better if he said "Individual Contributor, Content & Communications at Stripe"? Some people think its arrogant to state your full job title too, like "what gives them the right to presume I care about their job so much?" or something?
IDK, i genuinely don't understand but would like to..
EDIT: or just downvote and move on that's cool too i guess. i have learned my lesson. he is disliked based on instinct and the reasoning is just post-hoc rationalization i guess. maybe asking for a justification in this regime is considered an attack.
The impression is of self importance. The way it is stated it gives the impression he works at a company that allows the internet to exist.
It reminds me of a time when stripe was the underdog against paypal and everyone championed them. Fast forward we have thought leaders from stripe thinking they work at the internet. Even paypal never pretended that. By replacing paypal with stripe did we end up with a worse paypal?
Perhaps author of essay will volunteer to be on the front lines of an american strike team since he doesn’t approve of financial pressure against evil. Sadly that will also affect innocent bystanders by causing then to be exploded, as will inaction. But yes some oligarchs may unjustly lose their super yachts I guess.
In the end, for sufficient discount, value moves irrespective. Druglords wealth is often notional. They might have a lot of cocaine, but they have to accept massive losses. Much worse than Bezos on a bad Amazon share day.
If I am a high net work person with a hundred-million property in the UK, I'm going to find a way to let my friend use it, even if the british legal system refuses to let me receive money for it. In some future date, what goes around comes around, and he lets me use his yacht.
If you rip too many people off, then one of the discount to values is "services rendered" and you can imagine what these services might be.
To simplify heavily, is SWIFT just an accepted and legal alternative to the hawala system?