krrishd

I think the role that crypto plays in enabling this is as a neutral, credible storage layer on which this token can be held, that is not my Postgres database as (eg.) Bridge - these tokens still are actual ERC-20s/etc that are present on-chain, as are the wallets that hold them -- but yeah, I'm:

- not sure how instrumental that actually is here

- not sure if that's just incidentally the easiest structure for Bridge, whose primary business revolves around facilitating payments via stablecoin (now, as a part of Stripe)

(I am not sufficiently expert here to comment on the odds of an outcome like that)

To dig into your example a bit deeper, there are a few general differences with an (eg.) Unit vs. Bridge.

- With a BaaS like unit, you're often actually forming a partnership _not just_ with Unit (a software provider), but the partner banks Unit works with. More specifically, you're operating two sorts of programs with the partner bank: programs around "money transmission" (_moving_ money on behalf of customers) and around "stored value" (_storing_ money on behalf of customers). Each of these programs tends to be pretty involved - as is having to be in a three-party agreement etc, working with an old-school bank, under legacy banking constructs, etc.

- With Bridge: Bridge is your single partner. Bridge _itself_ has partner banks for the sake of both banking + money movement, but when you store customer funds as stablecoins in a crypto "wallet" Bridge spins up, it is operationally different than if you were to store them as fiat in a customer-specific bank account you opened at Bridge's partner bank, under a classic FBO/DDA program. The partner bank Bridge using is more involved in the money _transmission_ piece, when you want to receive customer funds in as fiat, or push customer funds out as fiat - but the funds being stablecoin at rest would seem to reduce the burden here.

So yes that might result in some cost-saving, but it's also just (vaguely) _easier_ to do from a technical/operational POV.

(Some of the details above may be wrong / vary by provider / etc - but having worked with both of these sorts of providers at some length, this is my "felt" difference and high-level understanding).

To be even more specific though, "cash equivalent" and the sorts of treasuries that implies are specifically short-duration ones (ie. this cash cannot be parked in a 10-year US treasury either)

Cash equivalents are short-term commitments "with temporarily idle cash and easily convertible into a known cash amount"

https://en.wikipedia.org/wiki/Cash_and_cash_equivalents

This strikes me as among the biggest macro risks, and (IIRC) is one of the reasons banks are fighting to prohibit stablecoins from granting yield (to keep the banking system working).

A different primitive that is related to stablecoin but not the same thing, popular among banks, is the "deposit token" - basically a stablecoin, but backed by bank deposits rather than 1:1 cash reserve, and operated by banks. eg. JPM's "JPMD": https://www.jpmorgan.com/payments/newsroom/kinexys-usd-digit...

Not sure how popular / active they are yet, but I imagine they will become a bigger deal as stablecoins are further regulated / banks push harder on their own interests.

> And my expectation is that issuers of stablecoins can do even more risky types of lending than Silicon Valley Bank did.

To be clear - stablecoin issuers are not allowed to "lend" the money out like a bank or a regulated lender _at all_ - much less doing "riskier" lending. Bridge and Circle still have to, by law, maintain 1:1 cash/cash-equivalent [0] reserves, which means the best they can do is things like US treasuries / money-market funds - which are also primitives accessible to consumers and businesses directly (ie. not inherently competitive).

Certainly there is still great benefit to Bridge, Circle, and the customers issuing stablecoins through them - because it gets them MMF/treasury yield without having to do a "stored value" program at a bank etc - but the issuers who are converting user deposits into stablecoins are also only getting user deposits in exchange for doing useful things.

People don't deposit funds into Mercury just because Mercury gives them 4% (there are plenty of places you can get 4%). You put money into Mercury for the software - this is primarily an implementation detail of how Mercury manages that money, affords to give you a competitive (4%) rate, and affords to give you great software.

[0]: https://en.wikipedia.org/wiki/Cash_and_cash_equivalents

There is still a "real", regulated money-holder in the loop - it's just Bridge (the manager of the cash reserves backing the coin - and licensed money transmitter etc etc). Or in the case of USDC - Circle, the "money-holder" / manager of reserves (also has tons of licensed / is very regulated). And the ETH network (where the coin itself sits) for much of the tech / logistics of making that held-money usable.

In fact - because neither Bridge nor Circle are banks, they can't do the fractional reserve that banks do, and are only allowed to do the 1:1 backed thing, with super regulated entities like BlackRock. "you can lend out the money you earn from selling someNiceCoin to services with higher yields" is strictly not true - they _cannot_ lend the money out, they have to store the money in ways that the end-consumers could do themselves, directly.

In that frame - the "efficiency" for you as a fintech is that instead of having to work with a bank on a "stored value" program, you can just work with Bridge and Circle, whose technological primitives are leaps / bounds ahead of the bank, but more importantly - who are much more flexible to work with than the median "partner bank", because they are not banks.

The whole "partner bank" ecosystem only really even scales because there are API providers like Increase.com / Unit.co etc to wrap them.

Frankly also my initial source of disappointment when I found out what this _actually_ is.

But yeah - in the case of this post / Bridge's offering, "branded" stablecoins are still redeemable for 1 USD, the only point of the "branding" is who is entitled to the yield and for how much "program management" around the stored value (relative to eg. a "stored value" program at a partner bank).

"It’s always backed one-to-one by the equivalent value of US dollars held in cash and short-duration money market funds at BlackRock."

So while there are other (potentially novel) sorts of counterparty risks - the backing is definitely more robust than (and pretty much entirely decoupled from) Bitcoin/the rest of the crypto sphere, and is closer to dropping funds off in a Fidelity money market.

Another good (early - 2023) read on this topic: "There are now two types of PayPal dollars, and one is better than the other " https://www.moneyness.ca/2023/09/there-are-now-two-types-of-...

The sort of rewards you get for storing your business's cash at eg. Mercury, or using a wallet like Cash App - have to come from yield generated by the actual cash deposits, which is the sort of program that is much harder to operate / requires close ongoing partnership with partner banks / etc.

If I'm eg. Mercury, storing the dollars you (business) deposit into my platform in a "branded" stablecoin will get me the same rewards - bc it's backed 1:1 by eg. a money-market fund at Blackrock - for much less of the operational burden, _because_ I'm not participating in a stored value program at an actual bank. The alternative today is that Mercury does store it at a bank, does have to maintain a "stored value" program with that bank, and the yields are standard bank interest (rather than eg. MMF).

Moreover - through Bridge, I can withdraw fiat USD and deposit fiat USD into that "branded stablecoin", and it's just an in-app balance in the fintech app - so the fact that it's a stablecoin doesn't change my experience at all other than in conferring standard rewards. If you look at how eg. Stripe Stablecoin Account labels the balance, it just calls it "Digital dollars" - so it's not much more than a backend implementation detail, really.

Other comments speak to this - but I wouldn't describe SWIFT (the predominant cross-border payments rail for high-value transactions that you couldn't just throw at a fintech eg. Wise) as centralized.

It's a bunch of hops, across correspondent (but separate) banks, that slow payments down, make them expensive + inconsistently traceable + introduce a bunch of manual ops burden along the way across each of the banks in the chain.

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

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

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

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

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

I think this is true of all reinvention, including the good stuff - reinvent for expedience/simplification/modernization, and recognize the things that were lost and re-integrate them as you learn of the consequence.

From Walter Isaacson's Elon biography: "Delete any part or process you can. You may have to add them back later. In fact, if you do not end up adding back at least 10% of them, then you didn’t delete enough."[0]

[0]: https://www.goodreads.com/quotes/11871764-delete-any-part-or...

https://news.ycombinator.com/item?id=43888225

Suddenly DeFi is interoperable with "more real" money, suddenly BTC is usable as permissionless collateral for USD-denominated loans (see Morpho), etc.

I think:

- they've had this degree of fakeness for almost the entirety of their existence (as long as they've needed "sponsorship" / been 6+ figure events)

- at its best, there also was a scene/subculture _surrounding_ hackathons that did care about building genuinely "cool" / "impressive" things, had an earnest interest in actually starting something longer term (there are some really successful founders that "incubated" in the hackathon scene). these folks frequented hackathons, and eventually moved on as the scene saturated with careerism / they "grew up" professionally

Link for the curious: https://pages.cs.wisc.edu/~remzi/Naur.pdf

it genuinely surprises me how popular and intuitive this "create more than you consume" meme is

what kinds of thresholds? (mainly curious since sandbox keys naively seem harmless to hand out)

1. Physical cash / gold (ie. bearer instrument moneys that are non-trivial to seize or control at scale)

2. The digitization of the above, retaining the same "non-trivial to seize or control at scale" property in a digital medium

We have headlines like this running today and HN is still on its anti-crypto kick? Like there still isn't any chance of self-custodied digital bearer assets having any real utility?

Hate to get flamey on here and I hope that's not how this comes off, but at some point it verges on caricature (and I say this as someone who is also disheartened by all the financial grift in crypto).

Sorry, but spoken like someone who has no idea how the fashion industry operates.

Seriously though, it’s one thing to not like the superficiality of the fashion market, but to deny that NFTs exploit the same demand (for less-gauche proof of wealth) seems wrong.

- Custom Artists / Producer / Lyrics description

- Custom rules to ignore songs on random selection

- Custom rules to select equalizer per song

- Folder based navigation

- Smart Folder based playlists

- Uploading your music to the cloud and streaming them as any other song

Nails my reasoning for having stuck to it all this time as well. way easier to include my own (un-published) music, mixtapes/etc that never made it to streaming but that I have mp3s for, album art that I want to swap out, etc.

I do fear that these might all be incidental features and they eventually re-orient to mimic Spotify's approach more closely.