Stripe Launches L1 Blockchain: Tempo

Stablecoin is not a technology. It's an excuse. An excuse to do what banks do while not being regulated like a bank or using the infrastructure banks use. Similar to how Airbnb is not a technology but an excuse to do what hotels do without hotel's license.

So it makes no sense to compare it to database, a technology.

Will this excuse work? Banking is a heavily regulated field so it's less likely than Airbnb, but it's ultimately up to lawmakers.

Except they are frequently _not_. I dislike crypto on principle, but you can't look at the exorbitant transfer fees and latency that a lot of banks charge for common transactions (Visa/MasterCard are especially bad) and say that crypto has no potential.

Yes, it would be easier if we could just trust our banks to offer instant settlement and very low fees, but they don't.

The problem with banks pointing to banking regulation is that they helped shape the regulation - and they did so to protect their business, not to help consumers.

We know that central banks are great at monetary policy. We know that decentralized protocols remove a lot of the more parasitic traits of banks. Why not have a central bank currency that can be traded on the blockchain, especially since converting it to real money will still entail KYC?

It's hard for the average non-US person to opt-into the US financial system. Sure, they could hold dollars in banks, but local monetary policy can nix that privilege at anytime by imposing foreign exchange controls. It's happened before, in some of the largest economies in the world: China in 2015, India in 2013, Argentina in 2011.

The current way users solve this problem requires a lot of resources. That's why you usually only see rich people have Cayman accounts, Canadian real estate, and shell companies in Panama. Stablecoins on permissionless blockchains make this process 100x more accessible for the average person.

So yes, stablecoins currently let you circumvent regulation.

But regulation can be a prison where you can pay to be free.

So what happens when it costs nothing to get out of jail? What kind of strains do this place on economies that people escape, as well as the economies that people join?

I guess we'll have to wait and see.

Contradictory requirements.

The reasons why are left as an exercise to the reader :)

This is missing the fundamental idea behind blockchain. You need a consensus mechanism and immutable ledger in order for it to be secure and truly transparent. Once you add those boom you have yourself another blockchain :-)

>So what are stablecoins really trying to do? Circumvent regulation?

No, stablecoins have less regulatory burden because of the public ledger removing the need for manual review and verification by various intermediaries. They are still compliant with regulation.

Circumventing sanctions.

- by USA government (indirectly) to re-dollarize the world without generating too much USA inflation, another IMF SDR mimicking China usage of foreign currencies to avoid hyperinflation;

- by many migrants in the I world to send money home, something in the III world could be converted to USD at a much cheaper rates and with much simplicity than classic banking/money transfer solutions;

- as a hedge against local currencies, considering dollar or some other currencies much more stable (see for instance the Argentina forcibly conversion overnight of USD accounts to ARS with enormous loss in 2002;

- as a decorrelated asset for DeFi trading on non-stablecoin cryptos (meaning market timing, buying BTC, ETH, SOL, ... when they dip, swapping then to some stablecoins when they top, waiting with the stablecoin for the next dip to buy).

In that regard the (unlikely) real existence of the collateral they claim is not much relevant: as long as most trade on stablecoins come from DeFi the Venezuelans, Bolivians, ... who choose them to bring USD home, the few company using them to pay B2B stakeholders in various countries are still happy anyway, as long as the stablecoin remain de-correlated to other crypto traders are happy anyway.

Tokenised stocks are more likely used to circumvent regulations since you can buy them swapping non-KYC coins against them avoiding capital gains taxes, at least partially.

Tether claiming they have the ability to back up their coins with USD lets crypto people claim their nonsense actually has value.

Of course the entire thing rides on the “trust me bro” guarantees offered by tether. They could erase a lot of the stink by going through an audit but for some reason they won’t.

yeah and this is great. I couldn't care less for banks protection.

Revolut blocked my account with 8k on it for 8 months, though their app said it will be max 2 weeks.

Customer support ignored me for 6 months until I said I am going to court.

So yeah fuck them. The is a case for banks but there is also a case for me keeping a chunk of my money in stable coins so its actually mine.

Edit: and to clarify I didn't do anything illegal, after I threatened them they completed their whatever they did and unlocked my funds that have been locked for 8 month.

And guess what - no consequences for them leaving me at that time without my safety net.

I don't think that customers or businesses should see Tempo very much. In the success case, Tempo is a platform like SWIFT or ACH that others employ behind the scenes to orchestrate transactions. "Decentralized, internet-scale SWIFT" isn't exactly the right analogy (there are clearly lots of differences), but it's not totally wrong either.

Why are businesses finding crypto easier/faster/better?

Yeah, I think this is the natural follow-up question. The answer differs a bit based on the use-case, but there are a few common reasons:

* Instant on-chain transfers avoiding trapped liquidity. If you're transferring money from financial institution A to institution B, and the transfer takes a day, you're either slowed a day in taking the next step or you have to somehow cover that float. Depending on your movements and their predictability, that can require big buffers.

* Fees that are lower than cards. Card payments are instant, which is often valuable (and superior to many bank transfers), but card transactions are also expensive relative to stablecoins. (And while card authorization is instant, settlement is not.)

* Reliability. This sounds funny, but, when sending money between countries, there are many more manual processes involved at the associated financial institutions than one might think. Money is frequently just... lost, and humans are required to hunt for it. (We see this all the time at Stripe.) Crypto is punishing if you make a mistake, but, if you do things correctly, reliability is all-but guaranteed.

* Fewer currency conversions. Wholesale FX for major currencies is very cheap, but minor currencies can have bigger spreads, and the actual fee incurred by a regular customer (e.g. with their bank) can be significant. Stablecoins often make it possible to skip conversions that would otherwise happen.

* Access to USD-based functionality. The US is the world's most sophisticated financial services market. Having a stablecoin means "having an on-chain asset", but it also typically means "having a USD asset", and a lot of major parts of the ecosystem (e.g. US equities and credit markets) primarily, or only, deal with US dollars.

Acknowledging the obvious, a reflexive answer frequently invoked here is "it's regulatory arbitrage", but I think this is some combination of misguided and incurious as an explanation. First, stablecoins are now formally regulated in the US (with the GENIUS Act) and in Europe (under MiCA), so their use is now very explicitly regulated. Secondly, it implicitly assumes that the only reason one would seek an alternative to the traditional ways of doing things is because someone is doing something illegitimate. I think this usually indicates a lack of understanding of the challenges, complexities, and costs associated with high-volume cross-border money movement. Indeed, and somewhat ironically given the claim, one of Bridge's large customers is the US government.

Today, if you want to transact between businesses or retail (folks like you and I), you need to find a route between the two entities' banks. This route might take several hops, passing through some central banks, and some of these hops might be instant or might take days to actually settle. On top of that, you need to pay the service that helped you find a route (SWIFT) and potentially the nodes your transaction goes through. Bottomline, it can be slow and a lot of middle men are taxing you.

This is why you see services like (Transfer)Wise, that basically try to bank everywhere, and allow you to send money faster by taking a shorter route (kind of like a wormhole :D). But they have to add liquidity everywhere, which they have to rebalance constantly, and it's centralized (single point of failure). FWIW it's great because for a long time this is the best thing we had.

Now, let's take a look at the other side. Using stablecoin is a matter of just creating a wallet. The openness by default of blockchains make it really easy to integrate with a blockchain as an entity (just use the SDK, it's there by design). Furthermore, it's in many cases instant and cheap (unless you're transacting on a slow blockchain, but then that's your fault).

That being said, the elephant in the room is that one stablecoin (let's say USDC) is now present on many blockchains. So if you have USDC on chain A, and I have USDC on chain B, we're back to our "tradfi" world where we have to find a route between our two chains, which might take us over many bridges, which can be slow and costly. The alternative, like with Wise, is to use centralized players who have liquidity on many different chains and can move things around by just updating their internal (and centralized) database. It's tradfi all over again :D

One way to see it is today the EVM ended up being the solution to a lot of other problems.

The banks are dying, their core banking is dying after 50+ years of service. There hasn't been any real investment since 2008, only minimal maintenance and cost cutting. Also generations of incompetent people at every levels created a situation with no escape.

Also things like SWIFT became very irrelevant in practice. I can assure banks did not really used it for a while.

When Ethereum and its EVM appeared 10 years ago a lot of people saw an opportunity to build a better "programmable money" platform but nobody really succeeded. At the same time Ethereum did not fail, improve and still secure the assets and run the smart contracts deployed in 2015. More than enough to convince the people on a sinking ship to jump on that boat.

My guess is the the EVM is becoming something similar to UNIX: a loose standard almost everybody will build on. Maybe not the best but something good and flexible to jump and we need to move forward.

Also the dollar urgently needed a new outlet so its on.

So it is not really about "crypto" it is more about the EVM as a platform.

- SWIFT is really just a messaging protocol between a distributed, decentralized set of global banks that are all passing messages/money between each other. Your SWIFT wire might pass through an arbitrary number of correspondent banks, sort of like a flight route with multiple stops, until it reaches its destination.

- Consequently: money moves slowly (up to 5 days), is expensive to move (variable fees assessed either to the payor or payee, by every bank in the chain), and there is an indeterminate amount of manual ops burden, multiplied by every bank in the chain.

- As another commenter points out - services like Wise really just use massive amounts of liquidity spread out globally to try to minimize the number of true, bank-to-bank cross-border settlements required to get low-value payments from A -> B internationally.

Ironically, I think the great accomplishment of stablecoins is its "centralizing" of cross-border money movement into a single ledger -- reducing it to a "book transfer" of sorts -- where getting all the world's money to pass through a single ledger would otherwise be a very difficult (probably intractable) challenge _if it were not for_ the permissionless-ness + global neutrality of the blockchain that is tasked with doing so.

(I wrote about this in a slightly longer post here: https://text-incubation.com/The+great+irony+of+stablecoin)

From the example given from Argentina, it bypasses capital controls, which until recently, made accessing foreign currency very hard/expensive/illegal. Argentina had a huge crypto boom because of them.

A regular log or ledger file could accomplish the same thing as a blockchain for significantly less technical debt or ongoing expense.

And note that the best use cases Stripe could find for "real world" use cases were a company trying to complicate its FX cash management, and a cash transfer app with fees higher than most of their competitors.

here is what you're missing, and is very easy to miss:

the third party, unaffiliated, developer experience is better on an EVM than it is is on a traditional centralized database. Than it is on a shared database with a bunch of signers. Than on any "web 2.0" cloud platform. the developers continue to bring their entire audiences with them, even though those audiences are quite small, they've grown in aggregate to be large enough.

in web3, of which EVM platforms dominate and are the most mature, there is a tiny payment for deploying your application once, and then it exists in perpetuity for free at unlimited levels of bandwidth. your users pay to update the state of your application, and in many cases you can earn from them doing that.

there is absolutely nothing in the cloud world that achieves the same thing at the same cost. the payment paradigms are entirely different, you have to pay for hosting, deployment, the thing that handles your deployment, additional workers to unbottleneck your continuous deployment, the bandwidth, bandwidth spikes, and get nickel and dimed on a ton of more things, or paying a premium to a service that handles all that for you.

additionally, the concept of "composability" is attractive in the web3 space, again spearheaded by standards on EVMs, the concept is that third party applications are automatically compatible with each other. there are infinite permutations of combinable operations one can do or enable amongst deployed applications. you can compose, or combine, applications in a far less cumbersome and less fragile way, than with REST and APIs of different people's apps in the web 2.0 world.

and on top of that, if one of those permutations becomes useful and you make it user friendly to do so, you can collect a toll for others doing that operation. this is just financial services, where "basis points" are collected by intermediaries.

a common application are forms of lending. initiating borrowing, trading the opportunity, and closing the loan within a split second, leveraging 3 - 10 financial services at once, is something that's better faster and cheaper than what has been possible outside of the blockchain space. the ability to do so is gatekept by the other financial industry and payment rails in ways that are no longer necessary to debate. now you can do these things with $3 in capital instead of needing $3 million dollars to pursue getting an API key from some old slow moving organization.

the compelling reason to create a new EVM are to change some basic parameters. block time, the size of contracts (the aforementioned operations) that can be deployed, and which standards are included into that chain, and of course the governance model - how are new standards deployed and how are transactions added. making stablecoins a first class citizen would need a new blockchain. how your governors/validators/nodes and RPCs function under load would need a new blockchain.

it is very attractive to developers that they can deploy applications "in the cloud" that have a very nominal cost, doesn't cost them to maintain even amongst spikes in bandwidth. they don't have to incorporate or do any formalities while having unlimited financial upside, solely because there is already hundred of billions of dollars in notional value sloshing around in that space to cater to already.

edit: I'd actually like to work with Stripe or other web3 organizations again on these kind of applications, now that I notice how boutique it still is to understand what's going on, email in bio

That's more or less exactly what this is. Stripe is launching an EVM L1.

The Ethereum Virtual Machine part gives it a mature tech stack with experienced developers and auditors. Plus, well-tested smart contracts that have already processed billions of dollars on other chains can be deployed on Tempo.

The "Stripe L1" part will ensure that it's fast, simple, near zero cost.

Indeed you can! We even have a name for that! Its called a blockchain.

> This maintains many benefits of the blockchain and lacks many issues (fast, simple, near zero cost, controllable to a given extent -- no takeover possible, ...).

Blockchains can do all of these things.

Perhaps you are thinking of "bitcoin", instead of "blockchains"? Bitcoin, something that was created a whole 17 years ago, indeed has many drawbacks compared to modern blockchains.

[1] https://docs.google.com/document/d/1L0Me9si4iMclOq8n-oG2yNQf...

As someone who actually worked on some crypto project (nanotimestamp) and also has got paid in crypto. I usually just convert it into stablecoins / gold coins for a short term (1 year max) where since I am still a minor, I don't have a bank account and so I mean, the end goal is to get my stablecoins out of the chain into real money not vice versa.

I had written something like this, just with a clickbaity title but its basically that I hate everything in crypto except stablecoins which I really like. Like there is paxgold which has gold and I genuinely like the fact that I think that we might be able to pay in gold or etc. stuff, I also like USDC too.

Here's my article: https://justforhn.mataroa.blog/blog/most-crypto-is-doomed-to...

- It rang a bell but I had to look it up, figured I'd share to save others the trouble.

That's part of it, but:

1. Progress often depends on evolving obsolete regulation.

Uber works much better than taxis (once upon a time, people could "call a dispatcher" an hour in advance, wait on hold, etc) and yet in the early years they had to work around taxi regs.

2. Blockchains are a fundamentally more robust way to run a ledger.

If any of you have ever written software touching tradfi custody you'll know about "reconciliation"--start of every business day, you get a dump of files in your FTP server in various proprietary formats. You parse the transactions and they don't add up. The Recon team hand-corrects and recategorizes edge cases so that the balance deltas match transaction totals and everything ties out.

This type of absurd duct tape is ubiquitous, and it's a major reason why trad rails have multi-day settlement times and even longer for international. Inflates team size and cost required to run a product. SWIFT is a messaging system -- bankers use it to essentially text each other about wires to figure out issue resolution. Some lower-level trad payments regulations are written assuming that this level of manual oversight is required to prevent ledgering errors and ensure sound accounting.

Stablecoins run on transparent, precise ledgers with machine consensus. This doesn't solve everything, but there are large categories of issues that can occur in trad payments that do not exist onchain.

3. Control is liability.

Some important regulations actually encourage blockchain-based payments. For example, money transmitter law places significant requirements on custodial money transmitters (you take money from Alice, with a promise to give it to Bob) that do not apply to noncustodial channels (you give Alice a mechanism to send directly to Bob).

You just can't "invest" in this vision just as you can't "invest" into treasuries, I mean you could but they don't give 100x the returns.

I skimmed through and I don't see anything that promises a lot of returns and THAT'S A GOOD THING. Just like how things like (okay, I was thinking of some universally loved non ipo company and I thought of silksong which is going to get released, so team cherry!!) So if you want to invest into team cherry, the best you can do right now is maybe buy the game but that isn't investing I think its in the similar manner and its a good thing since it prevents frauds and false returns advertising

There is (usually) no free lunch. Nothing that can give 100x returns anyway, there is insane competition on things like on beating the market consistenly even with 1% is really hard and only very few companies do and even then, their past record doesn't indicate the future remains the same. Tldr: I am that salesman of index funds. also diversify, s&p have a huge concentration on AI stocks and so please diversify into world stocks or maybe even more into non american stocks since american markets are heavily focused on AI and I doubt that it will play out since the markets do feel like they are in a bubble right now

In many countries what the economy needs to function well includes things that are illegal.

Part of the very high level play is the US Govt seeks to diversify away from depending on nation states for borrowing, and to promote tech companies to the status of reserve holders.

This doesn't add much to the consumer however. I think in fact we are looking at a "fragmented currency" future where you hold like 36 different stablecoins in your wallet because certain platforms accept certain stablecoins. The GENIUS act doesn't offer strict guarantees for getting out of a stablecoin into USD, so I predict dark patterns and "incentives" to make it hard to get out of a stablecoin.

I’m typing this shortly after buying my groceries with a visa debit card that was funded 30 seconds before the transaction over Lightning Network with Bitcoin that was sold at a 0.1% fee for USD and immediately then transacted on Visa debit payment network.

The reason banks are lobbying so hard recently to close “loopholes” in latest US legislation is because with stablecoins you even need them less and less to hold dollar exposure.

The days of traditional banks are likely numbered and the crypto skeptics commenting on HN have their world models upside down. At least that is my view currently.

Right now they say USDC:Yes and USD:No. They could easily say yes or no to either one at any time. Blockchain as technology is irrelevant.

Even more specifically, a blockchain is for when you want Byzantine fault tolerance, i.e. you don't trust one or more of the actors involved. This is the main distinguishing feature of blockchains IMO, the reason we have proof of work, proof of stake, etc. It's also the main thing I saw people getting wrong when using blockchains during the earlier waves of cryptocurrency fever; most proposals for blockchains did make sense as distributed public ledgers, but didn't really need the extra computational overhead because only trusted parties were adding blocks to begin with.

Stripe, nor any other bank or bank-esque thing needs this because they have already well solved their problem of "trust."

"Blockchain" is pointless overhead here.

blockchains solve a self-invented problem

Never trust a cryptocurrency developed by a for-profit corporation.

Oh, wait... I've been handed a piece of paper...

Because I feel pretty confident that it is dwarfed by the volume of money that has been unlocked by tying crypto to ransomware.

The others aren't doing well right now despite the fact that the tech that runs them can do what crypto promised, often better. It will all come down to whether people will buy in?

It's not for lack of trying that traditional, "database driven" cross-border payments are costly and unreliable. SWIFT have thrown technology at this problem: GPI, Swift Go, ISO20022, etc.

Unfortunately the ecosystem has an extremely weak technical culture. Banks rarely follow the standards as written – your perfectly crafted API payment may be re-keyed by a low-paid human operator on a slow, buggy UI written a decade ago.

I could believe that the developer experience and technical standards of the participants is where the value lies right now.

The one thing I'm not sure on is to what extent those ecosystems depend on reduced regulatory scrutiny compared to banks.

None of those things require a blockchain and are all made less efficient by doing them that way.

Again, truly decentralized cryptocurrency ADDS slow clunky overhead; that's the price of decentralization. Everything you're imagining is ALL done much easier with good ol' databases et al.

Are you claiming here that things like banks and stock markets don't exist?

Genuinely curious though; what kind of 'money related features', that have no non-crypto counterparts, are you referring to?

Like what? Speculation?

If the goal here is to overcome regulation isn't all this threatened by the possibility of new regulation that recaptures this behavior?

The conventional system is slow, insecure and does not interoperate well because of regulation.

This whole scheme is just dressing up a centralized payment provider as a cryptocurrency to avoid regulation for a short period of time.

I mean FFS the dang tokens are literally pegged to the dollar.

That being said, I'm not entirely sure it's a bad thing...especially outside of the US/europe banking I get the impression that banking regulations are arbitrary and political and if all we get from crypto is escape from those regulations it may be worth the extra fraud and so on.

Most of these L1s will likely end up becoming L2s in the near future, especially if they can rake in revenue via sequencers

https://coinmarketcap.com/currencies/tac-protocol/

Feeling defeated is important too to rethink your strategy.

Recruiters want Übermenschen probably.

I do think it's possible they put more money/talent onto the problem after it happened though.

In this day and age, countries need not be beholden to the pile of duct tape that is the credit card system and its innumerate middle-men and inefficiencies.

This is a good thing.

How?

> existing systems are either fully general or trading-focused. Tempo is a blockchain designed and built for real-world payments.

What makes existing systems not suitable for instant, borderless transactions? What makes this new chain suitable for instant, borderless transactions?

Any system with an API is programmable.

https://www.ft.com/content/b3c5b67d-1df8-4417-8dd5-2c86d76d6...

Eg if Australian locals suddenly switch transacting cocaine at scale in Tether instead of AUD, the US government can borrow more money by providing that collateral to Tether.

Edit: Izzy Kaminska recently had a, as always, solid and less snarky summary at https://www.financialsense.com/blog/21379/redollarization-an...

So if Stripe doesn't force their merchants to provide an invoice which has company name, company address (jurisdiction!) and company registration number (for me to check if it actually exists) then the invoice is rubbish and to be used as toilet paper.

Simple principle, but in my interactions with Stripe they fight tooth and nail to implement and/or enforce it. And even if their merchants "enable" Stripe invoices then Stripe doesn't stop them from putting random addresses into the forms.

Of course the shitty-invoice merchants often have domain privacy enabled and self-claim to reside in a country without any imprint laws on their website. You can pay to them with VISA/Mastercard via Stripe but have no idea which country they are in. Stripe knows exactly in which country both seller and buyer are located at the time of transaction, and they do not use that information to apply the proper tax rate to the transactions. Also even if you show them that a merchant has been skirting VAT payments for years I think they do not force the merchant to state proper invoices for all impacted transactions during that timeframe.

In my opinion these are systemic compliance deficiencies at Stripe and the lack of technological remedies for this problem is apparent (like checking email TLDs to see if customer is in EU). It result in a significant tax theft problem negatively affecting EU member states.

Second, permissionless does not mean decentralized. You can have all validation of a POS chain ending up on a single computer.