Nostr Web Client

I think you're spot on with a solid plan to increase adoption but there are some problems with the economics and risk. Allow me to explain.

As you point out, it would require a huge effort to reach out to merchants and consumers. That's a lot of money up front.

At the same time, they're not getting much in the way of revenue, because the big selling point to merchants is that it's lower fees than credit cards.

So unless it works and works on a grand scale, it would be a terrible investment.

Beyond that, there are three more large problems that would need to be addressed in order to convince merchants to buy into this system:

1. Accounting complexity (tracking basis for capital gains)

2. Volitility (because their costs are going to be in fiat, so a conversion is generally going to be necessary)

3. KYC requirements (add a large amount of friction and make it difficult to deliver the easy-to-use experience)

Finally, there's also another major challenge with regards to the investors that would need to front the aforementioned money: market protections

IF the plan works and it works on a large scale, what's to stop someone else from competing without having to have paid for all that education of the market?

Once the market is established, others can start up with a fraction of the cost and create a compatible system. Lower costs mean they'd be able to charge lower fees and beat the first mover. In contrast, making a propritary payment system allows for vendor lock in, which makes the big up front investment more palatable.

Dr. Hax 2y ago

So what does all that mean? It'd only really make sense for a large holder of coins to fund this. A more useful coin would make it a more valuable coin (in fiat, buying power, or however you want to measure it). Thus, assuming they didn't sell their entire stash to finance this plan, they'd be getting compensated by the appreciation in addition to the promise of future profits if the business plan works out.

The software would need to take care of all the tedious accounting, integrate with the software businesses already use to fo their books, have an option convert to another currency at whatever cadence the merchant it's comfortable with (immediately, at the end of the day, weekly, manually, etc.). The fees need to still be lower than the alternatives and it still needs to be easy to use after taking all these features into account (no pun intended).

All of these things are tractable problems, but they'd also require a high liquidity, low fee trading system in order to deliver the conversions and keep the fees low. All of this would have to be behind the scenes stuff that the users (both merchants and customers) would never see, let alone have to deal with.

The most logical fit would probably be for an existing cryptocurrency exchange to take this on. It'd amp up volume (at least on the sell side) and they already have a lot of these big, complicated moving pieces implemented.

The KYC is a tough one. I've seen systems that allow you to start with just a phone number until you get to a certain amount of money moved. That'd be good, but if there's a way to avoid the requirement for KYC and have the money go directly from the buyer to the seller, that'd be better. The fee could just be something the buying is paying directly to the payment system. No middleman, no KYC requirement (in the US, as I userstand it). The currency conversion would be difficult to also implement in this way, but possible if it's really important. So again, it's a tractable problem, one way or the other.

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Dr. Hax 2y ago

I guess the bottom line is that if you build something better than what's out there now (lower fees, at least as easy to use) and you successfully get the word out about it, it's only logical that people would sign on if it'd benefit then, such is what you basically said.

The hard part is delivering on the low fees and easy to use parts. I think that's why we haven't seen this happen yet.