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.

▲

cco 5 days ago | parent | next [-]

> 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.

I think I'm confused. You paid 0.1% on this transaction, but if you'd done it with just a Visa debit card tied to a traditional bank account you would have paid 0.0%.

Am I missing something?

▲

sundbry 5 days ago | parent [-]

He gets the benefit of just-in-time conversion to fiat; so his exposure to inflation purchasing power loss is nil.

	▲	hdjrudni 5 days ago \| parent [-]
		What rate is he getting on his crypto? I get ~4% on my fiat. Some cryptos are doing better than that, so it's certainly possible to beat, but I wouldn't chance the volatility. Unless it's doing better than that.. then I think inflation is eating the crypto, not the other way around? Edit: I see, because Bitcoin isn't adding additional coins, it's "non-inflationary". I think this is moot when you ultimately have to transact through fiat, so the only thing that matters is BTC-USD conversion rate.

▲

threetonesun 6 days ago | parent | prev | next [-]

Unless I read this wrong there were likely two "traditional" banks in this process you just described? At the very least it sounds at least twice as complicated as how I pay for groceries with no obvious benefit.

▲

alchemist1e9 6 days ago | parent [-]

What banks are those?

The debit card issuer is a non-bank issuer on the Visa payment network.

LN coins are self custody origin coins.

No banks I see, except the grocery store’s on the other side of me. But soon they will accept LN directly in a few years or less.

▲

anthem2025 6 days ago | parent [-]

Why would they ever bother?

To serve a tiny percentage of their customer base that just ends up finding an already supported method anyway?

Where exactly is the value for them?

▲

alchemist1e9 6 days ago | parent [-]

You are obviously completely unaware of the popularity of Paypal, CashApp, Venmo within the general US population and of Square for POS by vendors.

The value proposition for everyone, consumer and vendors is both lower fees and ability to easily diversify their income/assets into non depreciating digital assets.

Somewhere there is a Steak n Shake presentation that explains their investment into accepting Bitcoin (via LN) has already paid for itself in fees.

▲

fnordpiglet 6 days ago | parent [-]

The issue is that for Steak ‘n Shake it’s fine because in the card network scheme they’re generally on the hook for repudiated transactions. So they pay fees and on top of that have charge backs from fraud. For you as a Visa card holder you benefit from that situation though because if your card is stolen you can claim fraud or theft and the merchant is often loss liable.

In your world you would be the one holding the loss if your card is compromised in some way. This is of course beneficial to merchants. But as a customer I would always prefer a card network backed transaction all things being equal as my personal loss liability risk is considerably lower - almost non existent. This is why credit cards are generally better for the payer. I have no incentive other than ideological to use any crypto payment method.

PayPal, Venmo, Cash App tend to not be merchant based transactions but cash like transactions by either people that are unbanked for whatever reason, or doing business person to person, or transacting with a merchant who doesn’t accept credit cards. Stripe (and square) make the logistical side of that less an issue than it was, and today it’s mostly about fees and loss liability transfer back to the originator of the money (as in a theft scenario it’s not the payer whose money is at risk).

▲

alchemist1e9 6 days ago | parent [-]

Steak N Shake accepts Bitcoin, both on-chain and via Lightning Network.

Paypal has USD savings accounts that pay interest, ACH support, and also issues standard credit cards if you like. On top of that they support multiple major cryptocurrencies and allow instant conversion to USD.

A high percentage of restaurants and stores in my area now accept CashApp payments directly along with other payments. Many people are using PayPal and Venmo also with merchants in person, and online Paypal is dominate.

Square is in the process of rolling out Lightning Network Bitcoin payments to all it’s POS terminals later this year with the merchant having control over how they want to handle such payments, auto convert, partial convert, custody Bitcoin. Could get interesting fast if merchants start offering discounts for non-credit card transactions, which they are fortunately now allowed to and the credit card companies can’t terminate them, what happens when USD stablecoin or Bitcoin payments are offered further discounts by the merchants due to their cost savings and preference?

I’m thinking about moving all my ACH auto pay payments over to either CashApp or Paypal also. And remember they both support ACH direct deposits.

What services are left for the traditional bank to provide me? FEDwire and international SWIFT wires … and … investment accounts for stocks and bonds …

I’d say they are on shaky ground as I know crypto focused companies like Coinbase are looking at how to get into traditional equities and bonds and guess what Robinhood already does that and has gone the other direction and acquired crypto companies.

The bigger mystery in all this discussion is why such a significant fraction of HN readers and commenters are so out of touch with what is happening in the real world and real economy with these systems?

▲

fnordpiglet 5 days ago | parent [-]

I think I touched on all this. These are advantageous to merchants for low fees and loss liability assignment. They offer very little to the payer who is banked and has credit. Of course more merchants are accepting payment methods that are highly advantageous to them, and the payment processing providers capture a better interchange by cutting out the middle men. But the person whose money is being used to transact gains nothing in this and loses repudiation (along with other incentive perks card issuers often provide for their interchange share). This was my point, and I don’t see any addressing of it. For the person paying (you) you literally gain nothing and lose card network loss insurance and other perks.

For bank transfers, again, you gain repudiation. You have a window during settlement to dispute the transfer. It’s short but it exists. This is seemingly inconvenient and not obviously useful until someone is trying to steal your money. Then it’s suddenly very useful.

As a general society the friction that transfer hold periods provide generally globally reduces financial crimes everywhere and provides global stability to the financial system that didn’t exist prior. These seem like stupid fuddyduddy things banks do but there was a time these didn’t exist and there was a reason they were created and that time was not a better time. It was materially worse for everyone everywhere. Having never existed in such a time makes it hard to understand that such a time might have existed and why it was bad - but for those interested there do exist books that explain how we got here.

	▲	Karrot_Kream 5 days ago \| parent [-]
		The consumer benefit would be when merchants start charging lower prices to payers if they use crypto. For example, I know many small businesses that offer lower prices, some on purchases as large as $9k (below AML limits), if paying in cash because it's easier to declare less in taxes when using cash. Likewise if a merchant realizes that they pay lower fees and have lower loss on stablecoin transactions, I can see a world where merchants offer discounts for those transactions. Obviously time will tell if there's enough margin to even offer a valuable discount to the purchaser and if merchants will become savvy enough to offer this dual pricing scheme.

▲

hdjrudni 5 days ago | parent | prev | next [-]

So you paid a 0.1% fee for a less convenient way to pay? I just tap my credit card or phone, and then the CC company debits my bank account automatically a month later, essentially giving me a free small loan plus 2% cash back.

	▲	alchemist1e9 5 days ago \| parent [-]
		When I wrote that it seems I needed to give more context for those who don’t understand the benefits of self custody Bitcoin. 0.1% is fee to convert to USD and in context of converting anything to USD, like stocks or anything one would hold in an investment account it’s a low fee. This means I keep my liquid capital in Bitcoin which has a strong tendency to increase in value and yet whenever I need to spend it, it’s instantly spendable in multiple ways, literally instantly and for a very very low conversion fee. I can also use a CC company and I agree there is a 2% cash back. There are multiple companies that are crypto focused and have issued CC and Paypal issues CC and I can settle the monthly balance using Bitcoin also. What I predict is coming soon, maybe next year or so, if POS support in the US to offer that 2% cash back directly to the consumer from the merchant should they settle in alternative currencies, like Bitcoin, like USD stable coins. The combined issue of interest payments on stable coin balances (custodial) and legal settlement rebates is what has the banks literally freaking out and starting to try and spread FUD about USD stable coins. They know their business models in the payments space is eroding and soon the money markets space is under pressure.

▲

sunshine-o 5 days ago | parent | prev | next [-]

I am curious about the Lightning Network, 10 years in it is still perceived as a failure.

What is blocking its adoption?

One I can think about is it is hard to accept that if I pay $20 for a pizza today, 6 months later that pizza might have cost me $40. It is a bit irrational but it will prevent most people from using it.

This is where the stablecoin thing is genius, one can decide/optimise when get in and out of crypto.

▲

wbnns 5 days ago | parent [-]

> What is blocking its adoption?

There's no native web experience that makes it easy to use Lightning in a browser; this forces everyone to step outside the box to figure out a way to (e.g. install extension or download an app)

There's also not much of an app ecosystem for it providing enough utility for people to use it each week/day

	▲	sunshine-o 5 days ago \| parent [-]
		Interesting, so this is I believe the same problem as all the Ethereum type stuff: you need to have it lives with your keys in the most horrific place in a computer, meaning a browser extension. Or put the web browser in the wallet. Either way, something like Metamask is really slow and scary. The core Ethereum stuff is pretty elegant but once you want to build an UI you get trapped in hell to plug it to the "web". Maybe the biggest problem of "Web3" is it was built on Web2.

▲

boringg 6 days ago | parent | prev | next [-]

What does a bank do? Many things that crypto can't but probably the number 1 thing compared to crypto ... the bank (via the FDIC) provides assurances for each account for up to $225,000 USD.

I wouldn't write off banks that quickly.

	▲	derangedHorse 5 days ago \| parent [-]
		It's important to note that FDIC doesn't kick in for instances of scams or other unauthorized transfers. It only gives assurances to deposit holders. Stablecoins under the GENIUS Act requires 100% backing and is more stringent than banks since reserve requirements are still 0%[1]. I think it's also useful to focus on stablecoins in a conversation like this rather than crypto at large. [1] https://www.federalreserve.gov/monetarypolicy/reservereq.htm

▲

6 days ago | parent | prev | next [-]

[deleted]

▲

kiitos 6 days ago | parent | prev | next [-]

i don't know why this fence is here or who named it chesterton but i'm DAMN sure it needs to go!!

▲

anthem2025 6 days ago | parent | prev | next [-]

That sounds like a needless pile of complicity and expense that offers literally zero value in return.

Crypto isn’t going to take over anything.

▲

alchemist1e9 6 days ago | parent [-]

What is complicated? It takes seconds on my phone, must less complicated than writing a comment on HN!

The processing fees are lower for vendors than credit card fees if they accept LN Bitcoin. For me the “savings” account is completely self custody held in a non-inflationary non-depreciating currency called Bitcoin.

Massive value for everyone by cutting out the legacy banks. As I said earlier, unless you actually do it, and use it, you won’t understand how rapidly crypto is embedding itself and likely will take over in next decade for sure.

▲

kiitos 6 days ago | parent [-]

it turns out that legal regulations are Actually Good and Really Important

▲

alchemist1e9 6 days ago | parent [-]

And how did you come to that conclusion? From all the money laundering done by the traditional banks for the cartels once they bribe the right AML personnel?

	▲	kiitos 5 days ago \| parent [-]
		no, from the lessons that we have collectively learned, from the hundreds of years of history that we've collectively experienced, that have resulted in the banking infrastructure that we have today. it's flawed and it can be improved, no question, but improvements need to reflect a basic understanding of the lessons learned by past experience, regulations were created for a reason, etc.

▲

liotier 6 days ago | parent | prev [-]

> “what does a bank add to this situation ?”

In developed states (so, not the USA), regulation that protects the consumer.