@btcpp posted this a couple days ago, but I didn't get around to reading it until today. I think @bluematt has some good insights here, the most most interesting of which was this:
Why can't we just give agents our credit card number and call it a day?Why can't we just give agents our credit card number and call it a day?
This doesn't work for a few reasons. First of all, the chargeback mess from people declaring charges fraudulent because their agent shared their credit card number with a scam site, or even because their agent made a purchase they ultimately didn't want, would bring Visa's network to its knees. More importantly, the internet's payment systems are built on a substantial investment in anti-bot technologies, captchas, and tons of effort to ensure bots can't buy things. Whether an agent is acting on behalf of a human or not, these technologies don't simply go away, and removing them from existing payment systems would expose merchants to the unacceptable fraud and chargebacks that led to their creation in the first place.
I hadn't been thinking about chargebacks and agents, but it does seem true that the current credit card network is not at all capable of dealing with a mass of small payments that may or may not have been desirable. So, either credit cards have to get much more ruthless with their cardholders (your card was used, you're on the hook -- I believe Reg E might get in the way of this #1410979) or they'll see their costs of dealing with chargebacks balloon. It almost feels like the credit card networks are cornered.
How long before stablecoins become just as broken as tradfi?How long before stablecoins become just as broken as tradfi?
It's time for a serious attempt at open payments for open agents. Whatever you think of bitcoin, it was, in fact, made for this. Payments that are not built around third-party gatekeepers, unsustainable chargeback systems, and inevitable KYC roadblocks are exactly what open agents need. Stablecoins are great, but many businesses, especially internationally, simply aren't going to accept the future of commerce being built on a platform where one company gets all the interest revenue and a single private key can arbitrarily seize funds.
This is a pretty bullish case for Bitcoin. As stablecoins continue to gain acceptance and regulatory approval, they'll get bogged down in backward-looking rules made by dumb politicians. Maybe politicians will be savy enough to adapt, but I doubt they'll be able to do it as fast as demand for agent payments increases. The result will e a series of annoying headaches whenever your agent tries to make a USDC payment to a merchant that isn't approved by the USDC network or your agent wants to make a payment but doesn't have and can't acquire the requisite CUCK-COIN token. Bitcoin could fill these gaps, and it could do a mighty fine job of it. Bitcoin's only value proposition is that it lets you break the law (#1263156).
The Achilles heel of stablecoins is that they too willingly accept regulation. I'm sure many stablecoin operators realize this, but the only thing stablecoins offer over the traditional system is less regulation. If in their desire to capture more market share, the stablecoins agree to regulation (they may not really have a choice here), they'll weaken the thing that makes them desirable in the first place.
@bluematt's post is thoughtful and worth the read.
auth -> accumulate -> charge. This doesn't exist, bozos? It's anyway going to take a night or 3 to clear, so you may as well do that.
Then, you charge whenever it hits $25. Good luck with your chargeback, bruh.
Doesn't this put all the credit risk on the merchant? there might start to be a lot of balances with $24.99 unless I'm misunderstanding how it works.
I don't know. You ever took the subway in new york or london? That's how that system works. Are you telling me that that system is high risk?
I guess I always assumed subway systems do enough volume that they get special deals with credit card companies. But for somebody who makes a niche API that does not necessarily have such a large captive customer base, couldn't they mostly get ripped off? I haven't yet used one of the subways where they let you use your cc as a ticket (or I'm just stodgy and always still buy the ticket at the machine).
You're point is fair, though. CCs are big enough that they will doubtless have many solutions to this. My statement was too strongly worded.
No. They don't. They just pay up like everyone else, or get insurance with their merchant bank. I know because I was a designer of this system back when I was still young and smart.
There IS something called "transit rules" which are a tad more flexible on how you do automagic auth, but much more stringent on the allowed amounts, than what for example a hotel may do, because there's no speaker in a subway gate that tells you they're over-authing, like the hotel desk clerk. But you don't have that problem with an online payment, because you can just say: yo we will auth you for $25, done.
The reason for $25 is because that's the cost of a chargeback on everything except amex. So If you charge under that, you actually use beloveth game theory to prevent chargebacks.
My statement though isn't that cards and their networks are awesome. My statement is that the Matts of this world that appear to have zero knowledge of how that works, should shut the fuck up and focus on the real benefits of using LN: no KYC, no trust, no 3 day settlement delay (depending on what you define settlement as), lower fees and a great subaccount system that you can just put in place without permission.
https://twiiit.com/TheBlueMatt/status/2026667191475777727
Exactly why Bitcoin and Lightning shine here—open, permissionless payments just work where traditional rails fail.