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Ask HN: What is your opinion on DAI a stable cryptocurrency built on Ethereum?

8 points by babaeth ↗ HN
In my opinion, it's delusional (at least for now) to believe that a massive amount of businesses will start accepting crypto like Bitcoin without selling it at the market value automatically. Businesses need stability and we can't ask them to trust a currency that can lose 80% of its value in a few months.

Businesses want stability but they also want to maximize their revenue by eliminating unnecessary costs. The current credit card processing fees are around 2-3% which is huge! By accepting a stablecoins like DAI instead of credit card payment a businesses could save a lot of money.

I would be curious to hear what HN thinks about this.

Edit: You can learn more about it here: https://makerdao.com/

12 comments

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TheSpiceIsLife
A full cost comparison works be interested. This would have to include.

Are there any providers that offer full merchant services based on any stablecoin?

What about any insurance providers for to cover pontial losses?

I’m going to purposefully avoid all the other typical questions of hurdles to adoption as they seem out of the scope of your question.

richardknop
How do you save the 2-3% processing fee? People will continue using their Visa / Mastercard credit cards so you'd have to persuade for profit businesses that do processing currently to use DAI and lose their income from fees. Not going to happen. You'd need to offer alternative payment method and somehow persuade people to switch.
babaeth
They can accept both forms of payment. They can simply add DAI as a form of payment accepted by their shop.
richardknop
That sounds simple when you say it but persuading merchants adding new exotic payment methods is a tall order. Do they need to buy a new device for processing DAI payments? That is extra expense they don't want. It would depend heavily on how the integration is done.

Do you need to train their stuff how to accept new payment method? Also now they are holding money in multiple places (bank account for normal payments, some wallet for DAI) so this introduces another overhead for them to handle.

How many people will pay with DAI? Will it be more than 0.01% of customers? Because there are almost no people who own DAI (nobody outside of crypto bubble), so you have problem on customer side. And why would merchant go through the trouble of supporting new payment method when it will be only used by a minuscule number of people (there are merchants that tried supporting Bitcoin payments and it turned out they had like 1-2 people paying in BTC in months so they don't bother anymore.)

I don't see it happening personally unless it can be done in a completely seamless way (for both merchants and customers) and I don't think that's the case. Existing payment methods are too entrenched and very convenient. People actually like using credit cards / Apple Pay etc. It's easy and user friendly.

The few places that accepted Bitcoin payments back in the day when it was trendy, it looked really weird and inefficient, people scanning QR codes, having to use special mobile apps to handle the payment instead of POS merchant already has and knows how to use. Seemed kind of pointless.

babaeth
1. To accept DAI you simply need a phone and a dedicated app that would generate the payment QR code. No new device needed. (67% of payments in convenience stores in China are being made with QR codes: https://technode.com/2018/03/16/qr-codes-nfc-china/)

2. There is definitely a chicken and the egg problem as there wouldn't be as many people ready to pay with DAI at first but it has never stopped good projects to take off. In my opinion the main issue (once the tech is ready with Plasma running on the main net) is to get merchants to accept this new payment method which should possible since it's literally free to try.

3. Paying with Bitcoin is completely different since most of the people who own some Bitcoins don't want to spend it as it's mostly used as store of value/speculative asset.

richardknop
1. What are the costs of your solution? Who's running the nodes, how much does it cost? Gas? Give me some numbers please.

2. Scaling. Current state - it doesn't scale. My own opinion is it will never scale, centralised systems will always be much more performant.

3. Not really. The only difference is Bitcoin is very volatile and most people are expecting it will rise in value so they are not spending, you are right. But as a payment system integration wise it would be the same as your proposed solution, some mobile app and scanning of QR codes.

Finally, give me a single reason why it would be better than current system (as I believe the answer to 1. it's not cheaper, it's actually more expensive as centralised system). And that was the only reason you have given. Is there anything else than theoretically lower fees (which I don't believe would be the case).

babaeth
So it seems that our main disagreement is about the cost of the implementation of such system.

While I agree that the current state of Blockchain and Ethereum doesn't allow this I also believe that a part of the scaling issue will soon be solve with Plasma, you can learn more about it here (https://plasma.io/plasma.pdf). In this case the transaction fees and processing time are drastically reduced and Plasma could support (in theory) 1,000,000 transactions / seconds. The sender will pay for the tx fees (probably around half a cent) and the payment will be delivered almost instantly.

So "the single reason why it would be better than current system", since you asked for it is really because transactions operated on an efficient Blockchain would be less expensive than credit-card payments.

richardknop
In theory what you are describing sounds appealing. One more issue I thought about is in a case this system ever became a thing, Visa/Mastercard could just lower their fees. Pretty sure they are still profitable even with much lower fees so there's a chance they could still outperform this plasma system since their centralised system will be more efficient and will allow them to have even lower fees. It would be good to have a competition to force Visa/MC to lower their fees though. And other payment processors. They are getting away with insane profits right now.

Also I don't think it's possible to rollout a system like this in China due to the government there. They would not allow a a system they don't control to be used. So it would have to be in some relatively free country where you would have to implement this.

RobLach
What’s the set of people who would pay with DAI but don’t have or are too unwilling to pay with a credit/debit card?
dangerface
I dunno about DAI but in my experience the processing fees for crypto currency are usually alot more than credit cards.
babaeth
This seems to be the equivalent of saying "I don't want to use the internet because it's too slow" in 2001. There are numerous organizations working on ways to reduce crypto processing fees, one of the most advanced in certainly Plasma: https://plasma.io/
lucozade
Not sure that's a reasonable analogy. The Internet in 2001 let you do things that you would like to do but couldn't, easily, before. It was a bit crap at them but it was delivering value incrementally.

Bitcoin did that initially, to some extent, by being the currency of a part of the underworld.

Unfortunately, what then happened was that crypto was massively oversold. It would be great for distributed currency. Not really. As a store of value. Too volatile. As a payment processor. Too expensive.

Now, we're getting the next stage which is that it'll be fine when we add this special sauce. And maybe it will be, I hope so. But TBH, I'd say that the onus is on having at least one system come close to meeting at least one of the sales pitches. Even if it's a bit crap.