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Comment by jernejzen | Hacker News Reader

As someone working with African companies (legitimate businesses, mid-sized transactions), the key use case is payments in stablecoins—their banking infrastructure doesn’t allow for reliable and consistent foreign remittances. These deals would be practically impossible without stablecoins.

(And to be clear, I’m someone who has never been particularly enthusiastic about crypto or blockchain.)

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Do you know why people would choose to use stablecoins, rather than trade shares in an ETF that held government bonds, or something like that? That's what stablecoins are, effectively just a share in the holding company's bank account.

How do you transfer those shares to another company to pay them?

As someone who tried to figure this out. The answer is essentially you must actively seek out a broker that lets you do this in the first place and let me tell you, in my country there are only a handful of them that make it easy and even those will still require you to fill out a signed form on paper and mail it to them.

Or a CD, or maybe just a bank account. I think of stablecoin issuers as banks because why not: they keep your cash, pay you some yield and promise to give it back to you when you ask them. Walks like a bank, quacks like a bank…

Does holding stablecoins require any sort of KYC? Or do I just need to maintain the security of a private key?

If the latter, I think that explains why stablecoins are popular in countries with weak institutions.

In a country with strong laws, and strong rule-of-law, "Code is Law" is a solution in search of a problem. But in a country with weak laws, it can be a lifesaver.

I'd consider this more of an export of US law than 'Code is Law' TBH.

Coins discourage if not undermine rule of law and weaken strong institutions. It’s the cat chasing it’s tail.

What's the evidence for this?

Their usage.

> keep your cash, pay you some yield

The GENUIS act and I think MICA both disallow that part, exactly for this reason... traditional banks were seeing the writings on the wall and lobbied for such yield distributions to remain their own privilege only. For now.

But you can pretty easily find similar/better yield using DeFi and stake/bond some of your crypto assets in various strategies.

The difference is that there are virtually no minimum and usually no KYC... but there are also not many guardrails/gatekeeping, which leave the place to many scams/traps. It's best to stick to the largest platforms/communities and not fall for insane APY claims.

I think for the same reason that most people hold cash in a bank account rather than putting all of their money in ETFs/bonds. Convenience, stability, and security.

Consider living in a country with an unstable and fiscally irresponsible government. And having a net worth <$10k. Suddenly being able to hold your money in USD, on an account that cannot be seized, and can be used globally, becomes incredibly attractive.

You don’t need financial literacy, there is no min-buy in like ETFs/bonds, and there is minimal KYC or other identity restrictions. I think this is an incredible boon for the billions of people living in such conditions.

Can you give more details on this? Why is it that the existing banking system cannot do this kind of foreign remittance? E.g. correspondent banking via Swift?

Is it high fees, is it overly burdensome sanctions/AML checks, something else?

because their central bank is sucks, simple

Not OP, but we have contractors in Nigeria, and paying them via regular bank transfer is nearly impossible. For example many banks will outright refuse to make SWIFT transactions to Nigerian accounts.

This is just one example of a few factors that lead to a sort of isolation from international banking.

>many banks will outright refuse to make SWIFT transactions to Nigerian accounts

The flipside of this is crypto turbocharging online scammers.

"The industry in Cambodia now generates more than $12.5 billion annually – half of the country's GDP, according to the United States Institute for Peace."

"The criminal gangs entice trafficking victims with fake job offers posted on social media and then force them to financially exploit people online including through fake romances or “pig-butchering” schemes in which the scammer builds trust with a victim before stealing their money, Amnesty said."

https://www.reuters.com/sustainability/society-equity/amnest...

The scammers will make friends with someone online, persuade them to deposit increasingly large amounts into a "crypto trading platform", then finally run with the money.

Crypto has created an alternative financial system with many fewer rules. This can either be good or bad depending on the circumstances.

I think it has the potential to be a good thing in the long run. In the short run, however, people need to learn to instinctively distrust crypto as a scam. Especially if the situation involves a friendly attractive lady you've been chatting with online who's really good at trading cryptocurrency and wants to share her secrets with you.

This is why banks often block you from buying crypto in the first place.

It's high fees, burdensome sanctions/AML checks (especially if the said country has been recently or is still on a GAFI list), plus the suboptimization of the core banking systems regarding international transfers, that make the whole things happen in weeks (or sometimes never happen if the end beneficiary doesn't start pinging, emailing or phoning its bank every now and then). The whole unreliability/unpredictability of the thing makes it undesirable for regular operations.

Why can they not just use America's banking infrastructure directly instead of using America's banking infrastructure indirectly through meaningless overengineered abstractions like stablecoins?

I am not an expert but I don’t believe most countries would allow their citizens to use American banking infrastructure, nor would most American banks accept a foreign account. Stablecoins get around these limitations, while also providing lower fees and higher availability.

How do they open the bank account? Looks like a foreigner opening a bank account in the US would need proof that they have a US address. (Or at least, the major banks I checked did.)

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