Why Crypto Will Never Fix Payments (feat. Patrick McKenzie) - Episode 143
ฝัง
- เผยแพร่เมื่อ 14 พ.ย. 2023
- Cas Piancey and @bennettftomlin are joined by Patrick McKenzie of Bits About Money to discuss why cryptocurrency is not a solution for the problems of payments.
This video was recorded on October 12th, 2023.
Read more: cryptocriticscorner.com/2023/...
Additional episodes mentioned in this episode:
Episode 136 - Moonstone Bank: FTX, Deltec, and the Mission to Move Millions
• Moonstone Bank: FTX, D...
Additional resources:
Bits About Money
www.bitsaboutmoney.com/
Patrick McKenzie Twitter
/ patio11
Protos coverage of Moonstone Cease and Desist
protos.com/alameda-funded-ban...
Federal Reserve Cease and Desist for Moonstone
www.federalreserve.gov/newsev...
Bennett's video about Cash App/Interchange Fees/Durbin Amendment
• Is Cash App a Fraud?
Other places to find Crypto Critics' Corner
Website: cryptocriticscorner.com/
Discord: / discord
Bluesky: bsky.app/profile/cryptocritic...
Mastodon: mstdn.social/@CryptoCriticPod
Twitter: / cryptocriticpod
Instagram: / cryptocriticpod
TikTok: vm.tiktok.com/TTPdPN2hK9/
Bennett's TH-cam: @bennettftomlin
Bennett's D&D TH-cam: @BTDND
Bennett's BlueSky: bsky.app/profile/bft.wtf
Cas' BlueSky: bsky.app/profile/caspiancey.b...
Bennett's Mastodon: mstdn.social/@bennetttomlin
Bennett's Twitter: / bennetttomlin
Cas' Twitter: / caspiancey
Bennett's Newsletter: TheFUDLetter.com/
Cas' Blog: / thecaspiancey
Bennett's Blog: bennettftomlin.com/
Timestamps:
#crypto #cryptocurrency #podcasts #listenable #banking #payments
![เปิดบ้าน เปิด Supercar อั๋นโอกิ เคยเอา rolls Royce เเลกพระ องค์ละ 100 ล้าน l [Nickynachat]](http://i.ytimg.com/vi/FeGwJwXauZ0/mqdefault.jpg)
Love the guest. He is not just knowledgable but also highly engaging.
Right? That's my kind of nerdy: highly knowledgable about a very specific topic AND able to talk enthusiasticly and interestingly about it.
And he uses great analogies for to understand.
Wow you guys have such awesome guests! Love to see Patrick go on about stuff he’s both passionate about and an expert on, in a format different from his excellent Twitter threads.
I know right jeez, they are truly killing it worms or not 🙂
This guy spews facts like a machine gun - and with generally better aim and more deadly. Very high level this and incredibly educational!
Having worked in a store people paying with cash is a security risk.
It was a combined hardware store and lumber seller so transactions in hundreds or thousands of dollar value were common.
Very true!
He is AMAZING! 🥰
My dad had that job as the check courier. This was in the 50's and it was amusing how just awful it was from a practical stand point. His favorite part was the little button on the front of the bank to summon the night clerk that was supposed to be easy to find before a cop drove by and asked, at gun point, why you were climbing over the facade of the bank. Ahh, the good old days.
I've listened to pretty much all of your episodes, but this one was one of the best ones. I learned SO MUCH. And a lot of the stuff I learned was stuff I didn't know that I didn't know about! Thank you so much!
As an employee of a bank, maybe my fav episode of CCC.
😂😂😂banisters!
Used to work in a bill payments center, huge buckets of checks came in via courier. That got changed about fifteen years ago when check images became legally equivalent. Every time we got cash we had to fill out special forms and drop it in a slot, plus cameras over every work station. Angry people would tape pennies to their bills and mail it in. Or theyd send it loose and the envelope would burst open in the equipment and spray coins over the floor. Cash is pretty horrible to process on the back end.
Living in Europe I'm always baffled that checks are still a thing in the US. We haven't used checks in over a decade.
@@lady8jane Some of our old people get confused by plastic. 😂
@@coonhound_pharoah We have a lot more old people than you (higher life expectancy and more people in general) and they managed. To be fair, a lot of them just use cash.
@@lady8jane I'm not sure what part of me making a light hearted joke made you feel the compulsion to make a sideways comparison about unrelated issues. Lighten up.
@@coonhound_pharoahit’s entirely a conspiracy theory to keep boomer comedians relevant.
I feel like crypto for payment usage had legs up until big blocker debates and BTC focusing on small blocks and basically saying oh no we can't compete with dollars now, we have to become gold first - creating incentives that harmed adoption and ultimately leading to today where those early adopting merchants stopped accepting it, and most crypto participants now are simply "crypto enthusiast" speculators. They look down on the guy who bought pizza with it as an idiot, not understanding they are treating crypto and speak about it more like a ponzi than anything else. To me, small blocks and crypto "enthusiasts/investors" broke the vision and adoption. Now it's adopted as a lotto ticket.
A stable currency is universally favored because it holds value, unlike weak currencies or especially fake money like crypto.
@@floxy20 pre-fork there was an actual growing amount of merchants and users using BTC to pay for things; basically libertarian geeks who like the idea of another currency or monetizing gold, with BTC analogous to a fully reserved gold back system. there was some actual traction for this. after this even though these merchants eventually largely stopped accepting it.
Big blocks won't change that crypto is terrible for payments. The original version is flawed as well.
There will always be a COST to processing payments weather it is physical cash or electronic money. Back end systems need to exist and there will always be a cost associated with it.
And even in the immediate moment cash has transaction cost. The risk involved with storage. Having to carry it. Etc. etc.
@@coonhound_pharoah A store local (sells nice beer + some food) to me went cashless a couple of years back and I had a chat with the owner about it. The charges that they had from their provider ended up being less than costs related to running a till, staff time counting the money/doing the banking, time spent having to manually input details into their accounts even before security concerns. It just saved them a lot of hassle.
Bro have you never heard of Nano? It's literally feeless and instant. Do better.
@@BrazyUK No
Reading between the lines it sounds like banks like that fee from transactional cost.
3:23 thanks now I need a Payments Iceberg or Tier List,
Small businesses I frequent strongly prefer cash for in-person transactions because they avoid processing and other card fees. I suppose the cost of giving change and physically depositing money is more amenable to them.
some credit cards the charged fee to the business for the transaction was five dollars. so unless it would be a huge purchase the business would decline
For a smaller business it's not a problem, gets worse at scale. At some point it also becomes a pretty big security risk to store and transport large amounts of cash to a bank.
Great show guys.
Outstanding episode. I love deep dives with (articulate, charismatic) experts geeking out like this.
I want to take a moment to recognize the episode cover with the tracksuit-wearing guy, because my first thought was "holy crap, is that patio11?!"... And then it was. Really love to see you all talking together, hope it happens again.
Never really thought about checks as “credit promises”. Great way to explain how inefficient that system actually is.
I'm going to have to listen again. He kept making very good points about how financial services evolved and if they didn't develop like that, the world would end. Good. Got that. There's just so much to payments I had no clue about...
I'm going to have to listen again because he was all over the place. Interesting info but very long winded sentences.
@@LeroyPeterson Yeah, there's a bit off that for me too!
Great guest! I learned a lot here and he's very engaging!
It's great to see that the comments are not all about this being boring, etc. This stuff genuinely matters.
Patrick was very engaging. Great interview!
28:20 this part left me wondering specifically if CCC would do an episode on the impact of the crypto blockchain mania on community banks, structures like credit unions + co-ops. Which made me wonder how it's touched the Labour Movement structures + institutions. I'm Canadian & the thought of the Ontario Teachers Union pensions tiied up in SBF's scams really upsets me.
I know I joke a lot on this site but it's so I don't cry. Incalculable human wreckage. For what? I wish we could declare a Year of Fixing Bad Incentives universally, then see how things look after we quit rewarding our worst impulses.
EDIT I know they discuss a lot of this here but I almost feel like I need a 101 + a drill-down. But I'm dumb lol.
Thank you Cas and Bennett for curating for us this fantastic gentleman with such a depth of knowledge into the financial system, which otherwise seems super obscure. Thank you Mr. McKenzie for taking the time to share this information.
Always enjoy ya Fellas 👋👏✌️😃
Amazing guest. Learned so much!
The US is way bigger than Japan and the UK. Our banking system exists in its fragmented form to cover as much of that territory profitably as possible. Different regions of the country have different needs and banks need different expertise.
But something like bitcoin isn’t a payments solution. It’s just a way to store the value of cryptographic work forever. It’s a novel asset class not a payments system.
It was designed as electronic peer-to-peer cash. Says that in the white paper.
It failed miserably at doing that.
But apparently it’s now an asset?
How is an entry in a distributed database protected by cryptography an ‘asset’.
@@dans2971 It was never going to be a good payments system, it’s just too slow and costs are too high. As to why it’s an asset, that’s what it’s being used as. The vast majority of transactions in BTC are trades. People are using it as an asset, many people trade it many people hoard it as their primary savings vehicle. I knew it wouldn’t be a good payments system, but I didn’t realize it would take in an alternative use. It’s a lot like gold. A commodity with limited supply that isn’t tightly correlated to other assets. And I think the price in dollars will be much much higher 10 years from now.
@@dans2971luckily you’ll never have to worry about it.
@@dans2971lol if you don’t know how cryptography and distributed consensus ledger works then your comments doesn’t matter! Bitcoin still work as peer to peer settlement/payment. The scale challenge will have solution in 2nd layer. 😂😂😂😂
"We can't bankrupt one third of the US financial system" is definitely a hold-my-beer moment for the move fast break things crowd lol
why was this not live? seem stitched together from separate recordings
Ohhh lol, I thought this was gonna be about how there’s no incentive to lower crypto TX cost lmao. Much deeper take, good shit
Great guest. This guy is hilarious and knowledgeable. Love the whole slow database viewpoint.
What a great topic. Ty for the episode
Great video!
It’s something to really understand something. It’s a different type of genius to be able to break it down to almost anyone so effectively! Very knowledgeable and comedic guest! He had me rollin a few times ngl lol
Happy Thanksgiving to you and your families guys. I am very thankful for all your view points and knowledge. This was a good episode. Keep it up!!!
I was waiting to hear opinions on something called the Lighting Network (?). I know almost nothing about it but the Bitcoin people say it's the answer to the slow network problems. This is a great channel. Thanks.
It’s garbage. The ux is terrible and it barely works.
@@Zaid_Mirlol it works every time on my side! 😂😂😂😂
Really enjoyed this, super informative and interesting. Thanks guys!
Would love to hear Bennet, Cas, or Patrick's opinion on using digital currencies in order to add microtransactions to commerce on the web!
A major pitch of crypto is to replace parts or all of the banking system and payments. Why not instead use blockchain technology and digital currencies to boost current infrastructures by offering more affordable transactions not previously possible through banks, credit cards, or payment apps? (e.g. purchasing an online article for $1 instead of buying a monthly subscription)
Because crypto transactions cannot possibly be cheaper, as the energy costs inherent in the crypto model fundamentally cannot be reduced as low as the banks can get theirs. It's not fundamentally possible for crypto to ever scale to the volume of transactions at the same or lower energy costs and computational costs. Cannot be done. This is because the design requires multiple passes of computationally expensive validation for security, whereas the bank, having full control, has no need for multiple passes of computationally expensive validation, and they can, for transactions where they're willing to take the risks, skip the validation step entirely, and simply log a transaction as tendered to them, and deal with any disputes later.
This means banks, even as stogey and resistant to change and modernization as they are, cannot be beaten by crypto for cost for unit performance. Especially since the bank is the only entity which requires a cut of profit to make the transaction viable, rather than the decentralized model where vastly more persons need to be cut in on profits to incentivize the required behavior. Add to that, that the banks actually do have fall back methods for when computerized systems are unavailable, which means they have vastly more robust systems in the event of minor network outages.
@@Mr424242424242424242 We agree with each point you make under the Bitcoin and proof-of-work model.
What if there is a network whose model is not energy intensive nor requires generating and splitting profit incentives? We use a digital currency that has no fees, no monetary validator incentive, is fairly quick and energy efficient. Scalability may or may not become an issue in the future as demand for any crypto is low. We want to use it to make transacting small amounts on the web simple. The convenience fee of banks and credit cards price out possibilities for small merchants and consumers.
Great episode! Learned a lot!
Great guest and great discussion. It wasn't mentioned that part of accepting credit cards for a merchant is that the merchant can't offer a discount for using cash. This could and should be outlawed.
Greate episode !!!👍
This was your best podcast yet! Absolutely enlightening and educational. And what a terrible message for crypto.
Love this guest!
Nice, learn alot even I've been in payment industry for a decade ❤
this podcast was a blast of information and that ending comment made me bust out laughing
32:57 & he finally mentions the real value of banks...
missing you guys
What happened are you guys ok???? Have not heard from you two in 2 months, I hope you both are ok and healthy I miss your videos every friday
The largest Tulip mania we have seen in generations.
It shows you’re id10t!😂😂😂😂
Tulip just happened for a year and never comeback! Bitcoin been here for 15 years and keep coming back!😂😂😂
Great video, lots of knowledge, wasn't with Patrick though on his views about repercusaion for banks that dont follow regulatory guidelines, seems alot get away with far too much, depending which regulartor your in bed with.
The thing with experts is, 'Legacy finance' guys dont know all that much about blockchain so their opinion is heavily biased. "Blockchain experts" pick and chose certain aspects of legacy finance and tout how they are better. Both sides creating a false sense of reality.
cash is dying because of atm fees
Use Nano. It's feeless.
Cas Coin hodl any updates on which moon we're headed to Diamond Cas + Blockchain Bennett?
Cas did your parents do the "Caspian Sea" thing with your name on purpose?
Discovered this channel thanks to Patrick Boyle's recent plagiarisms
plagiarisms? please fill me in. Short version is fine.
First- guest was awesome & I learned tons! However, if you had an opportunity to assess Bitcoin at $17 and even in hindsight deem it “overvalued”- you should assess your biases because you whiffed on a once-in-a-lifetime investment opportunity. If your valuation framework doesn’t consider the factors that caused bitcoins boom, it’s, at-best, an incomplete framework (at worst you’re just wrong).
That's based on the assumption that it would gain in value. It could just as easily remained of no value. It's a gamble on a speculative asset. You may not win on some by avoiding it but you also don't lose anything if it fails
@@fakename1656 what do you mean by assumption? It’s empirically true that it did gain in value from $18. There is no assumption being made in hindsight- that’s the whole point. A smart investor would learn from the mistake of missing out at $18, not double down on the faulty logic that caused them to miss that opportunity in the first place.
@@Panpizzadeluxe it's only fact in hindsight, at the time he could have bought it at 17 it was just speculation.
@@Panpizzadeluxe You've put into words the thinking that, when taken to its logical extreme (not saying you are saying this), produces the bagholder cults that chase previous bull runs on anything well after their expiry. I think it likely that some investors would want to distance themselves from all associated with that, maybe over-correcting while doing so. If the lesson to learn from missing out is to make risky plays into assets one believes are worthless, I think investors would also have a lot to say about that.
And at best, you don’t want to participate in speculative bubbles that cause untold environmental harm
The all to famous Bitcoin payment for a pizza.❤😊
No new videos lately. Hope all is well.
Cash is king but dying. I still prefer cash for privacy. Did he just day cash is ergonomically incorrect because you have to count it and account for it. Maybe I misheard
*Chris Farley!!* 😊
The guest is not very versed on CBDCs and Bitcoin as peer to peer electronic cash.
Are you guys on vacation?! I crave more extremely detailed reporting on all things wrong with crypto! What the hell is happening with $1 million El Salvadoran citizenship?!!!
Has bro never heard of Nano? It's literally feeless and instant. Do better.
Problem is it's nano. I don't think anyone wants to hold it long term.
I'm a long term holder@@Ned-bw5tt
This guy is living that fight club life. Is he leasing an abandoned building to dry his clothes in?
This is one of the reasons I'm for Bitcoin. I think banks have too much control over our finances.
My bank recently decided it wouldn't cash a check from my employer and is now closing my account "due to fraud 🙄".
Obviously with Crypto you wouldn't ever have this issue.
LOL! you just have worse with crypto.
The nice thing about centralized things like a bank is that you can call them and work to get that issue fixed. If you send your bitcoin to the wrong address, you are SOL.
Maybe next time you can tell your guests to make sure their laundry isn't in the background of the shot 🤣
Watching again. It's fairly clear none of the crypto people have any idea about implementing say, Solana, as a payment system. I would also say, from what I have seen online, they are mentally incapable of doing so due to their.... well, their paranoia. This leaves the only use case, again, as untraceable transfers for villains. They have their own system of dispute resolution.
The only use case?😂😂😂😂
Haven’t heard of ETF?
In terms of capital preservation which do you think have more purchasing power in 5-10 years? Bitcoin, gold or fiat? 😂😂😂😂
@bahmak2003 OK, if use case includes "capital preservation" when did you buy your bitcoin? If you bought it 7 years ago - congratulations, go with God! If 7 days ago, fiat.
Bitcoin will not bank the unbanked except it has already done that in El Salvador.
This guy is living in a Trap House
Can’t stop crypto. Don’t resist
The only crypto that even wants to bank the unbanked is Cardano
😂😂😂😂 cardano shill
@@bahmak2003 I'm no shill. I recently sold my ADA for NEAR and IMX. People said I was shilling for those two. I then sold back to ADA. I have no loyalty. But what I said about cardano is true
Technology finds a way. Too young and naive. Short sided and frivolous, and those who can’t do, teach, those who have underestimated the power of crypto. Stablecoins? This guy was so full of himself and his short sided view was hilarious. I agree that it needs to be honed and right now it’s not feasible because of the current state , but again it will find a way. I’m 72 and if you told me that we would pay by a card, lol.
Reminds me of the people who mocked the auto and flight. This technology is massive.
26:45 so we’ve gone from “illegal immigrant” to “undocumented immigrant” to “underdocumented immigrant”
Wonder what the next level is
THE FEDS WILL NEVER ALLOW CRYPTO TO BE LEGALLY USED FOR LARGE PAYMENTS UNLESS THEY CAN TRACK IT.
Um, they can track it. And so can everyone else who cares to look. It's on the blockchain. 😂😂 It's a public record.
WITHOUT A KNOW YOUR CUSTOMER LAW AND NAMES ATTACHED TO WALLETS, THERE IS NO TRACKING. BESIDES, CRYPTO IS TOO VOLATILE.@@coonhound_pharoah
crypto doesn't require the fed's permission for large payment (just look at the number of hacks, especially the ones that are suspected to be done by north korea)
The issue that crypto has is when people want to cash out/convert it to fiat money, which often requires regulated banks/financial institutions to be involved
THAT SAYS NOTHING ABOUT THE VOLATILITY OF CRYPTO. ONE MINUTE MY COIN IS WORTH 17K THE NEXT MINUTE IT'S WORTH16.5K. HOW WILL THIS WORK FOR PAYMENTS@@Failurefaust
@@Grauenwolf SMALL PAYMENTS ARE NOT ECONOMICALLY FEASABLE WITH CRAPTO
This guest is a faster talker and is pushing CBDC. Pass, also his use of word salad and his body language is off putting, his reference to the apple scenario even violates how basic accounting works in regards to a transaction.