I keep hearing this (healthy) skepticism, but it does lose sight of what is happening in many countries. For a lot of folks (me included) Web3 is about using decentralized blockchains in a web context to reduce problems that arise with control from centralized systems. It makes sense for specific use cases, so let me give you 2.
1) Finance (DeFi). Even for valid (non-criminal) uses cases, there are numerous laws and regulations that translate into crazy fees to do proper crossboder money transfer. I transfer money every month from the US to different countries in LATAM to pay employees, and historically you get screwed with various fees depending on how you structure the transfer (e.g. to the employee directly vs. to an entity in the receiving country that disburses the money to different local employees).
During the past few years I have encountered everything:
- unexpected fees beyond the local transfer fee at the receiving end (that change some times) (hello folks at Interbank!)
- low-fee provider that canceled our account because the TOS said that the service was meant to be used to send money to family and not to employees (hello folks at Xoom!)
- holding of money transferred for a week because of some threshold passed that triggered some AML check (hello folks at BCP!)
- provider that canceled transfer to a particular country for political instability (hello folks at Transferwise!)
- etc etc
All that goes away when you use p2p networks (like the ones from Binance https://p2p.binance.com/en?fiat=CNY&payment=ALL) and stablecoins to transfer money. The fees are low (or sometimes non-existent) and the transfer happens in seconds (vs the hours/days in a traditional system). Literally millions of cross-border dollars get transferred this way every day. Additionally, I hear of other folks who have escaped authoritarian regimes but still have family in those countries where there are strict restrictions to send/receive money. Guess what they are using?
2) Digital Property/Rights:
Whether you want to accept it or not, there is an entire market where all kinds of property is being transferred through smart contracts. Sometimes the traditional digital item (say an NFT) has an associated real-world contract attached to it that extends some sort of right/ownership of a physical item in the real world. The rights to these items is being transferred from person to person every day. That market keeps growing, and it is not just "exchanging jpegs" anymore.
For both of these use cases, there are real world scenarios where a central authority has been by-passed for a legitimate transaction. And it happens every day today. The use cases for web3 is not running a "distributed Wordpress instance", but other useful real-world use-cases like these that we are starting to discover.
> Even for valid (non-criminal) uses cases, there are numerous laws and regulations that translate into crazy fees to do proper crossboder money transfer.
DeFi would have to follow those laws, right, and would be just as much of a pain to use after it has all of that compliance built in?
Otherwise, what you're doing is just illegal, and the alternative you should be comparing crypto to is something like "hiding money in carseat cushions", not TransferWise, right?
If you are talking cross-border money transfer, in countries like the US you cannot just willy-nilly have an exchange that changes fiat for crypto and vice-versa. In order to sign up for Kraken/Coinbase/etc you have to pass through KYC / AML on-boarding and are under continuos AML monitoring of the size and structure of your transactions. In the original example, the US company buys crypto from an exchange in the US using fiat from a US Bank Account and will transfer that to another exchange off country (in my example it would be a LATAM country). There is a trail of the entire process on the sender (US side). However, it is true that the responsibility and thoroughness of the AML on the other side depends largely on the receiving country(the KYC/AML program requirements of the exchanges in the other side will vary great). Legally and conceptually, it is just like it would happen with transfering Fiat in the traditional way (e.g. once I send you money to your bank in LATAM you can take it out and do whatever you want with it - legit or shady), except with all the fee/speed/etc benefits. The main conceptual difference is how you create liquidity (changing from crypto to fiat) on the other end (i.e. through p2p or through the exchange). Of course the gray area is what happens on the other end, but as a sender you have gone through all the checks and requirements. You even get paperwork at the end of the year and the US exchange will submit suspicious activity reports (if necessary) to the US govt just like a regular bank would do. Totally legal and correct.
> Sometimes the traditional digital item (say an NFT) has an associated real-world contract attached to it that extends some sort of right/ownership of a physical item in the real world.
Does it? Do you have any examples of this? How does the ownership get enforced?
This seems to address the most salient criticism of NFTs which is that the only thing which changes ownership is the NFT itself, but I have never seen it in practice.
They don't even need to be NFTs per se. The idea of blockchain-backed ownership is starting to jump everywhere. There are already a few companies like this: https://fraction.co/
2) The example of fraction is not just a "selling platform", but an actual real problem being solved (fractional ownership of real-world items). In LATAM for example, there are exceptionally convoluted structures to partially build and own low-income centers of commerce (kind of like malls). Fake ownership documents are very common. This solves that problem squarely. There are more real-world use cases like this.
> Digital Property/Rights: Whether you want to accept it or not, there is an entire market where all kinds of property is being transferred through smart contracts.
Are any of those smart contracts for physical items recognized by, you know, actual laws, courts, governments, etc.?
> Sometimes the traditional digital item (say an NFT) has an associated real-world contract attached to it that
That is the only thing required for an actual contract for an actual physical object, and NFT is just some scam attached to it.
Do you know of any good resources for tracking what real-world usage there is for smart contacts? Preferably something that details actual usage statistics rather than a list of companies that purport to do something with them.
1) Finance (DeFi). Even for valid (non-criminal) uses cases, there are numerous laws and regulations that translate into crazy fees to do proper crossboder money transfer. I transfer money every month from the US to different countries in LATAM to pay employees, and historically you get screwed with various fees depending on how you structure the transfer (e.g. to the employee directly vs. to an entity in the receiving country that disburses the money to different local employees).
During the past few years I have encountered everything:
- unexpected fees beyond the local transfer fee at the receiving end (that change some times) (hello folks at Interbank!)
- low-fee provider that canceled our account because the TOS said that the service was meant to be used to send money to family and not to employees (hello folks at Xoom!)
- holding of money transferred for a week because of some threshold passed that triggered some AML check (hello folks at BCP!)
- provider that canceled transfer to a particular country for political instability (hello folks at Transferwise!)
- etc etc
All that goes away when you use p2p networks (like the ones from Binance https://p2p.binance.com/en?fiat=CNY&payment=ALL) and stablecoins to transfer money. The fees are low (or sometimes non-existent) and the transfer happens in seconds (vs the hours/days in a traditional system). Literally millions of cross-border dollars get transferred this way every day. Additionally, I hear of other folks who have escaped authoritarian regimes but still have family in those countries where there are strict restrictions to send/receive money. Guess what they are using?
2) Digital Property/Rights: Whether you want to accept it or not, there is an entire market where all kinds of property is being transferred through smart contracts. Sometimes the traditional digital item (say an NFT) has an associated real-world contract attached to it that extends some sort of right/ownership of a physical item in the real world. The rights to these items is being transferred from person to person every day. That market keeps growing, and it is not just "exchanging jpegs" anymore.
For both of these use cases, there are real world scenarios where a central authority has been by-passed for a legitimate transaction. And it happens every day today. The use cases for web3 is not running a "distributed Wordpress instance", but other useful real-world use-cases like these that we are starting to discover.