They mentioned "working closely" with Coinbase and Fold.
I hadn't heard of Fold, so I checked it out and they're currently marketing a credit card that rewards you Bitcoin instead of "cash back", points, or airline miles.
Not very relevant to this discussion, but Fold emphasizes "opt out [of] surveillance" and "opt in [to] privacy". I went to create an account and saw the "sign in with twitter" option, and here are the permissions they're requesting:
- See Tweets from your timeline (including protected Tweets) as well as your Lists and collections.
- See your Twitter profile information and account settings.
- See accounts you follow, mute, and block.
- See your email address.
How can a company think this aligns with that sort of marketing at all?
Can the person using the twitter OAuth API change those permissions? Ie if you are the business setting it up, do you get an option over what permissions are granted?
The privacy.com (private/disposable payment card numbers) app and website have tons of third party trackers and spyware embedded, too.
Privacy is just a marketing bullet point, these days. Apple pushes it hard as a differentiator, yet most of iCloud isn’t end to end encrypted and almost all of the apps in their App Store have spyware embedded in them.
> The privacy.com (private/disposable payment card numbers) app and website have tons of third party trackers and spyware embedded, too.
Well, the relevance all depends on your threat model. Personally, I care about protecting my banking info from strangers but not about protecting my info from privacy.com and its third parties.
I think "spyware" is a bit of an exaggeration considering that presumably many privacy.com users have a threat model similar to mine.
I'm curious about this stance; are you worried specifically about people stealing money from you? Because outside of that, the privacy.com-third-parties (and then third parties they might sell data onward to from there) seem more strangers than the businesses you have actually have a direct financial transaction with; you can't even enumerate who they are.
I mean, if you look on the privacy.com website, the only 3rd-party request is Google Fonts. Personally, the privacy tradeoff is worth being able to pull a font from the cache, even though I understand that the same doesn't apply to everyone
If digital currency becomes really successful then it will eventually put Visa out of business.
Money should be a public system, not a private enterprise. And the ability to transfer money without paying some gatekeeper should be a fundamental right and core function of government.
I think for government to stay relevant then it needs to start to encompass more distributed protocols. To the degree that it fails to do so then I think it loses relevance. Which may be fine, since government has historically performed fairly poorly. Maybe we can replace most of it with independent technology in a different paradigm.
> If digital currency becomes really successful then it will eventually put Visa out of business.
Not really - there don't exist any digital currencies that A) have desirable economic/security properties B) can scale to billions of users and C) have a UX that's accessible to unsophisticated users.
Visa's role in a Bitcoin-based economy is probably providing custodial wallets, Lightning payment routing, etc.
> the ability to transfer ... should be a fundamental right and core function of government
The government has historically done a pretty bad job of this (which is why 99.9% of consumer payments go through private systems).
Why would I want the government to manage this when we know how to do this well without a government involved? What's the benefit of using FedCoin over using something decentralized with good monetary properties?
> I think for government to stay relevant then it needs to start to encompass more distributed protocols. To the degree that it fails to do so then I think it loses relevance.
This is an oxymoron - if a protocol is distributed, it inherently obviates the need for governmental management.
This is a good read of the market and I agree with most of your points.
If you're saying the government shouldn't be innovating in the digital currency space or if the impact would be negligible due to feasibility or some other issue, I'd strongly disagree.
> What's the benefit of using FedCoin over using something decentralized with good monetary properties?
The government and existing banking systems are the actors with the largest degree of potential impact for any currency solution in the next 30 years. This solution doesn't necessarily need Bitcoin-like decentralization by any means to solve real problems with real innovative solutions.
To me, Bitcoin has proven itself limited to only a speculative store of value solution and has failed to deliver impactful, broadly felt impact. Any product based on Bitcoin will inheritly suffer a limited upside due to this. This is where the difference is for the existing entities, the central banks, domestic banking networks, financial intermediaries - unlimited upside.
"Why would I want the government to manage this when we know how to do this well without a government involved? What's the benefit of using FedCoin over using something decentralized with good monetary properties?"
Fed coin would be in fact very useful for the government itself... not sure if you have some understanding of the latest 2008 crisis and how the fed address the issue but there are many shortcomings in the solution proposed that would be easily addressed with a government backed digital currency.
The main one would be , in my opinion, to be able to manage more efficiently money lent to banks.
At that time the banks received a lot of money from the fed with the hope that the this money would be use to increase the loans ( and so the economy).
However, banks were not very keen to follow that inventive and did not lend as expected.
The point in having a digital currency would have let the fed to reward (with a lowest rates) banks playing the game.
This just one example I have on the top of my mind right now, but I'm sure we can find others advantages.
>The government has historically done a pretty bad job of this...
I'd say the government is _currently_ doing a bad job of this. Historically, at least in the 1000+ years prior to the advent of digital payments, governments did a great job of facilitating uncensorable peer-to-peer payments by minting various types of currency (commodity, fiat or otherwise) that people could subsequently trade how they saw fit. It seems plausible to me that the last 100 years of private-organisation facilitated transfers is ultimately revealed to be an anomaly.
There are actually but probably you haven't used them. But that's not the point. It's just a matter of time that some digital currency will satisfy all your demands.
It looks like Visa is stepping in the niche that Facebook's Libra has identified, but couldn't fully explore due to regulatory pressure. It would be interesting to see if they can succeed at letting people and businesses efficiently settle transactions in cryptocurrency.
Do you think there is a sufficient market for businesses looking to transact in crypto?
I'm a big believer in the tech, but when I look today I still don't see how Visa really plays well with the current crypto market.
There are almost no cryptocurrencies that actually have desirable cash-like qualities that would result in their use in the retail space which basically eliminates all B2C like options. CBDC or other forms of tokenization could be a big deal, but CBDC certainly isn't there yet, and despite some interesting initiatives I haven't yet seen a value add tokenized solution in the retail sector. Including in developing countries, existing solutions using traditional payment networks are still more desirable.
There is the classic Innovators Dilemma where the new hot product will obviously underperform traditional products in the interim but eventually outperform them over the long term. I could see this happening in the developing world, but to my knowledge I have yet to see a product that seems to fit this mold.
I think that cryptos are going to become more popular in the coming years with the ordinary people. As for the businesses — they don't want to own them, since they are not widely recognized currencies. When CBDCs come along, that would be a totally different story. They will be likely just made the official currencies of their countries.
Having said that, I can see a case for payment systems to start transacting in existing cryptos, so long as they can satisfy the regulators. They already do that with different real-world currencies. When you have a card in one currency and a business charging you in a different currency, the payment processor does automatic conversion between them for you. With cryptos, everything works the same way, except there may be a crypto-exchange in the middle. The payment processor just needs to guarantee the delivery and some stable exchange rate.
Admittedly, these are not pure crypto transactions. But businesses can already do those directly over blockchain. The major thing stopping them is that there are few other businesses who would accept crypto. Hopefully, payment processors adding support for cryptos could move everyone else to broader adoption.
I still think that the mainstream financial sector has more than a fighting chance against crypto.
A lot of the features that cryptocurrency offers are primarily appealing to specific narrow categories of customers, who are very close to being bad actors on a broader stage. Your typical consumer isn't screaming about "I want an economic policy hard-coded into the currency so everyone's hands are tied when the economic-political situation changes" or resenting the fact that you can get fraudulent transactions reversed in most payment systems today.
The things regular consumers like about crypto can be done as well if not better with a centralized infrastructure. Faster and cheaper transactions, and hassle-free cross-bank and international transactions are not exactly out-of-the-blue expectations. The current players are just hamstrung by business processes, and to a lesser extent, regulations, that date to the era of paper cheques and IBM 360s. And then, of course, the margins in charging $25 and taking 24 hours to push around less than a kilobyte of data.
> Faster and cheaper transactions, and hassle-free cross-bank and international transactions are not exactly out-of-the-blue expectations.
I think a lot of these problems originate from the fact that deposits at banks exist only as records in the bank's database, and therefore can only really be moved between accounts at the same bank.
To create the illusion of moving deposits between banks, another bank must accept to take on the liability in exchange for something else, something that can actually be moved between banks. This is what is referred to as "reserves", which is what we call the special money that only exists as records in the central bank's database.
So we can think of deposits as "JP Morgan Chase dollars", "BoA dollars", "Wells Fargo dollars" etc. while the real money is the "reserve dollars" that cannot be acquired by individuals.
Innovations like CBDC might put the reserve money directly into the hands of individuals and fix the issues that you mentioned. So that would mean that the central banks will be the ones with the fighting chance against crypto, not the private financial institutions.
I'd be also curious to see which space (if anything left) Visa would be moving on the retail side. They have already filed a patent which could be an additional indicator [1].
In general, once a national CBDC is in place it'd become rather difficult to foresee the position of middle players between issuer of cash (CB) and user of cash (people) in retail space, e.g. Visa and commercial banks. In a world where anybody can send cash to each other without a middle player (even offline), the role of middle players would probably reduce from "money printers" and large-scale trusted actors to "security box"-holder financial players and value-added service providers.
On the private sector side, there are also quite strong players stepping in, likes of Celo and various other public chains. On the public sector, China's DC/EP would be publicly out in 2022 creating a strong inertia [2], followed by couple of other central banks in various stages.
Things are going to get really interesting next few years, which certainly will change the today's financial landscape.
Agree with you. If I may add, this would be feasible only:
If gov issued is own digital currency, which will mechanically would lead the value of the others digital currency worth near zero..
> It looks like Visa is stepping in the niche that Facebook's Libra has identified, but couldn't fully explore due to regulatory pressure
As far as I know, Libra (called Novi, now? Or maybe that's just the wallet name) is still under development. They issued a new whitepaper recently that I read as very much directed at regulators - lots of acknowledgements of their concerns in the text.
Which isn't to say it'll go anywhere, but maybe not dead yet.
This reads to me more like visa has bought into to crypto currency and is spending real money to build out integrations. Seems like they’re a player in the space, not just there for fomo.
What do they class as "digital currency"? The major world currencies have been purely electronic for decades now. Nothing physical is moving around, even between banks. Bitcoin is unique not because it's electronic but because it's trustless. Those "stablecoins" they then go on to mention are no different to regular currencies, they're just there to allow people to cash in on the hype of bitcoin.
My favorite company positions are partner agnostic. I’m not sure why but I somehow morally agree more with a company who provides their service to a variety of partners and doesn’t have a preferred vendor.
Likely it’s the adtech bidding /auction background, where many tech companies aren’t agnostic and double dip on the buy and sell side (google, att, amazon, Verizon).
It might be a knee-jerk reaction, but I'd be very wary of Trojan horses. The old money and just all of the traditional economic infrastructure has a vested interest in seeing crypto fail because it takes power away from them, and Visa is no exception.
If you didn’t know, visa has effectively pivoted to partly be a tech company. I worked with them on data licensing agreements (evil adtech) and from that perspective their systems were more up to date and worked better than oracle’s.
« Today, fiat-backed digital currencies, commonly referred to as “stablecoins,” have emerged as a promising new payment innovation, combining the benefits of digital currencies with the stability of existing currencies like the US dollar. »
Unfortunately Bitcoin's creator is the only one who can bring peer-to-peer electronic cash to the world, it will not be Facebook or any other company. If Satoshi stayed with Bitcoin project Visa, MasterCard, Swift and all the other major financial companies would slowly become thing of a past.
I guess an expectation of some future releases related to easily spending or buying crypto perhaps?