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).

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rfw300 6 days ago | parent | next [-]

I wonder if some of the non-robustness of the tradfi system is a feature, not a bug. If my account tries to send someone $3 million, I'd prefer that it's intermediated by a confused bank employee staring at a screen rather than a beautifully efficient, irreversible machine consensus. The bottlenecks and intermediaries create friction, sure, but that isn't per se bad.

My hang-up with crypto is that it solves the ledger-keeping part of running a financial system, but it isn't clear that's actually the hard part! Preventing and remediating fraud, money laundering, etc. are, and crypto makes those issues worse, not better.

	▲	dcposch 5 days ago \| parent [-]
		> If my account tries to send someone $3 million, I'd prefer that it's intermediated by a confused bank employee staring at a screen This is a nice lens for looking at when stablecoins make sense. If you're an American using your Chase account to buy coffee at Starbucks, the permissioned, heuristically fraud-checked, slow-settling tradfi system is well optimized for you. If you are an importer buying $3m worth of bulk coffee from Kenya, you would much rather have an instant 1:1 USD transfer on beautifully efficient machine consensus. In many countries in the world, the banking system is extractive and unreliable. The "confused employee" is not there to help you. The two weeks of money in transit is no benefit, just a source of additional counterparty risk, cost, and delay. An immutable and transparent ledger is not for everything but it is a useful primitive.

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CPLX 6 days ago | parent | prev [-]

> Uber works much better than taxis (once upon a time, people could "call a dispatcher" an hour in advance, wait on hold, etc)

Uber rides ARE taxis.

The innovation of Uber wasn't done by Uber it was done by everyone having a GPS enabled always connected phone and computing device in their hand at all times.

	▲	onesociety2022 6 days ago \| parent [-]
		Uber isn't just taxis - if a bunch of taxi companies just got together and developed a taxi ordering app that looks just like Uber, it still won't be Uber. Uber is a whole bunch of things combined: - very intuitive taxi ordering UX (for riders) and dispatching UX (for drivers). - circumventing regulation so there are no more artificial limits on taxi supply in a given city. - enabling gig economy: because you can use your own personal vehicle, you can work anytime you want for however long you want. You don't need to lease a taxi for an entire week or an entire month. You can choose to work for 4 hours on a weekend only during surge times if you wanted to. So it allows supply to be elastic to meet demand while also offering flexible work arrangements for part-time drivers.