Fintech dystopia
184 comments
·July 29, 2025dmantis
strken
At the end of the day, most crypto has a built in way to turn fossil fuels into significantly less money than you paid for them, so it doesn't even apply to the US unless they've started requiring KYC for ASICs and GPUs.
I am not convinced this carbon-intensive form of money laundering is a good thing, but it certainly exists.
TrackerFF
I don't think any first world country makes it possible to do banking, if you decide to simply not comply with AML/KYC regulations. You very much become unbanked, if you simply don't want to or can't comply with those things. (European here)
ta12653421
Oh well, there are some shady brokers in Cyprus which are using EU passporting regulation but which are "not really good" with KYC ;-)
malthaus
and in what fantasy world would a system primarily used by questionable countries/organisations/individuals ever become a global standard?
dmantis
First of all, who says that it has to be a global standard?
It's not an 'all-or-nothing' thing.
Those are instruments which already help many people (those you define as questionable for some reason). I'm actually pretty happy to see that the world has a tool to help millions of people with "questionable" religious, cultural, political, ideological views or sexual orientations. That reduces the pressure and advantage of people who want to make their lives harder.
If you don't need it, don't use it. That's totally cool. It doesn't have to be global. To be honest, I don't think anything needs to be global. That gives too much leverage to a single group at the expense of everyone else. The world is better off having many options for everyone.
Kinrany
In any world where the standard is convergent, not explicitly agreed upon, and there's no natural boundary between shady users and non-shady users. An x% shadiness user joining the network grants justification to the next x-0.001% shadiness user.
sjducb
Gold became a global standard.
atemerev
Questionable individual here. My bank accounts are all blocked now just for the reason of my nationality, nothing else. Crypto is currently my lifeline.
neumann
This is a really fun well-written and on point set of articles. Thank you for sharing.
I feel like at this point there isn't anybody defending stablecoins who isn't using them primarily speculative investment/trading. There has yet to be a usecase for distributed ledger that isn't solved better by a centralised ledger other than niche counter-culture solutions whose users are typically blinkered to the fact that they are already a self-selected techno-elite who can't bring their utopia to the commons. That ended a bit more nasty sounding that I intended, apologies.
ChadNauseam
> There has yet to be a usecase for distributed ledger that isn't solved better by a centralised ledger
what about situations where centralized ledgers won't serve you? e.g. someone who wants to buy drugs, or sex workers want to get paid. And you mention "niche counter-culture solutions" but I don't think it's so niche - in 2002, the government of Argentina stole 2/3rds of everyone's savings by forcibly converting their dollar-denominated bank accounts into pesos at a terrible exchange rate. Not having to worry about this because you have a trustworthy government is nice, but it puts you into an elite class of your own.
wakawaka28
What you're talking about, resistance to government meddling, is more of a function of the currency than the ledger. Cryptocurrencies only work because of people silly enough to buy them in exchange for actual "valuable" or official currencies (which can be imposed on some people in the world at gunpoint). If a cryptocurrency was forced on you at gunpoint, it most certainly would not be one that provided any anonymity.
Do cryptocurrencies provide value to people living in third-rate hellhole countries? Perhaps, because they are connected to the outside world. Ideally you could just have a foreign bank account that your country cannot touch. If the big governments gang up on crypto exchanges, then crypto will be worthless. The only reason they don't gang up on the exchanges seems to be that they (the people in government) use crypto for nefarious activities and money laundering.
The technological innovations of cryptocurrencies make for good thought experiments or puzzles, but serve as a distraction from their inevitable uselessness.
lurk2
> Ideally you could just have a foreign bank account that your country cannot touch.
Doesn’t solve the problem as these assets can still be seized by foreign governments.
dbdr
> you could just have a foreign bank account that your country cannot touch
How easy is it from most people in the world to "just" open a bank account in another country?
nlitened
> serve as a distraction from their inevitable uselessness
I don’t understand your point. You said that crypto is only useful as long as governments use it for nefarious purposes and money laundering — so basically it’s a guaranteed relevancy in the future, no? How is that inevitable uselessness?
wmf
The other legit use for stablecoins is allowing people in Venezuela, Argentina, etc. to hold US dollars while the US government pretends they don't know this is happening. (Officially the US does not encourage dollarization of other economies against their will.) I agree that a centralized US dollar CBDC that isn't run by scammers would be a simpler way to do this.
pjc50
This is basically the valid use case, yes. It turns the bitcoin goldbug inflation paranoia on its head: the stable currency is defined to be the US dollar, and an elaborate proxy system allows people to access that stability when their local government doesn't want them to. Circumventing exchange controls and so on.
Although the current government is having a good go at reducing the value of the currency, it's barely budged on the chart.
baq
> Circumventing exchange controls and so on.
This is the only new thing. Maybe.
potamic
If a country does not allow their citizens to exchange currency, then this is as good as a black market and comes with the same risks as obtaining currency through any other black market means.
nlitened
Carrying around or storing piles of foreign currency is much riskier than having a USDT wallet. You also cannot fly to another country with cash.
jb_rad
You think the same system that chose to bail out the banks in 08 should be fully responsible for our financial future? I believe a more distributed financial system would provide more stability for all of us. The GENIUS Act establishes some very strong standards that I believe will strengthen the economy, the dollar, and enable more people to enter the financial services industry in a competitively healthy way. A scammer would have a hard time 1:1 backing their stablecoins with bonds and equivalently stable assets.
queenkjuul
That system is still deciding your financial future
csomar
The reason they don’t want a CBDC is to be able to collect interest on behalf of the people holding the currency. If the state launches a blockchain CBDC, the state will profit. It’s too much money not to corrupt the most powerful people on the planet.
laserbeam
> There has yet to be a usecase for distributed ledger that isn't solved better by a centralised ledger
As I understand it, many countries in the European Union use distributed ledgers for elections. Essentially it lets you cross reference votes and store that database across servers in multiple countries. It also prevents post-election data tampering by the state holding the election.
My understanding is this this system is not an open to every random Joe who wants to have a server (like bitcoin is). I think you still need to be a state actor to be part of the distributed database (so it's not a zero trust environment).
(Unfortunately, I don't have any good links to back this claim up)
barumrho
This seems to misunderstand stablecoins since it is useless for investing/speculation as the value is just $1 if it's successful in its goal.
bergen
I'd argue crypto casinos (pump.fun comes to mind) would not work without stablecoins because no one would back them with real dollars.
carleverett
But stablecoins are backed by real dollars.
People hold dollar-backed stablecoins because they believe the US dollar to be the most durable unit of account on the planet.
All the proof you really need for that is that most crypto users outside the US still consider the value of their crypto tokens in terms of how many US dollars it’s worth.
The author of this article talks about this being a “parasite” to the US monetary system, but it’s hard to think of a better thing that could’ve happened for the US. Not only has it reinforced that dominance… it’s also driven hundreds of billions of dollars of US treasury bills purchases from providers like Tether and USDC.
jb_rad
Would you consider Stripe and PayPal also interested in speculative investment/trading? They seem responsible to me. Also, stablecoins aren’t speculative. Cryptocurrencies absolutely are. But stablecoins are pegged to USD, hence “stable.”
I think you’re right to criticize crypto as a techno-elite project. However I think stablecoins have a legitimate use case for billions of people who don’t have access to good banks, or a stable currency, and can’t afford traditional fees. IMO it’s one of the best things to come out of crypto.
csomar
I agree with the premise that on a tech basis, a centralized ledger is just as good, if not better, than a decentralized one.
The problem stablecoins are solving are self-inflicted: KYC to open a bank account, restricted nationalities, account freezes, capital controls, taxation over-reach, etc.
At some point someone figured out that if they start over, there is a lot of “value” to be unlocked out there; and paid/lobbied/sponsored the right person to execute on that.
johncole
I agree, I see very few (none) use cases for crypto that aren’t human misery trafficking. This article seems to explain that well.
CaptainFever
Buying NSFW things.
eszed
I think the further down the supply chain of "NSFW things" you go the more closely it resembles "human misery trafficking".
GLdRH
Exactly
jernejzen
As someone working with African companies (legitimate businesses, mid-sized transactions), the key use case is payments in stablecoins—their banking infrastructure doesn’t allow for reliable and consistent foreign remittances. These deals would be practically impossible without stablecoins.
(And to be clear, I’m someone who has never been particularly enthusiastic about crypto or blockchain.)
whatshisface
Do you know why people would choose to use stablecoins, rather than trade shares in an ETF that held government bonds, or something like that? That's what stablecoins are, effectively just a share in the holding company's bank account.
jb_rad
I think for the same reason that most people hold cash in a bank account rather than putting all of their money in ETFs/bonds. Convenience, stability, and security.
Consider living in a country with an unstable and fiscally irresponsible government. And having a net worth <$10k. Suddenly being able to hold your money in USD, on an account that cannot be seized, and can be used globally, becomes incredibly attractive.
You don’t need financial literacy, there is no min-buy in like ETFs/bonds, and there is minimal KYC or other identity restrictions. I think this is an incredible boon for the billions of people living in such conditions.
baq
Or a CD, or maybe just a bank account. I think of stablecoin issuers as banks because why not: they keep your cash, pay you some yield and promise to give it back to you when you ask them. Walks like a bank, quacks like a bank…
0xDEAFBEAD
Does holding stablecoins require any sort of KYC? Or do I just need to maintain the security of a private key?
If the latter, I think that explains why stablecoins are popular in countries with weak institutions.
In a country with strong laws, and strong rule-of-law, "Code is Law" is a solution in search of a problem. But in a country with weak laws, it can be a lifesaver.
lmm
How do you transfer those shares to another company to pay them?
paperpunk
Can you give more details on this? Why is it that the existing banking system cannot do this kind of foreign remittance? E.g. correspondent banking via Swift?
Is it high fees, is it overly burdensome sanctions/AML checks, something else?
svetb
Not OP, but we have contractors in Nigeria, and paying them via regular bank transfer is nearly impossible. For example many banks will outright refuse to make SWIFT transactions to Nigerian accounts.
This is just one example of a few factors that lead to a sort of isolation from international banking.
0xDEAFBEAD
>many banks will outright refuse to make SWIFT transactions to Nigerian accounts
The flipside of this is crypto turbocharging online scammers.
"The industry in Cambodia now generates more than $12.5 billion annually – half of the country's GDP, according to the United States Institute for Peace."
"The criminal gangs entice trafficking victims with fake job offers posted on social media and then force them to financially exploit people online including through fake romances or “pig-butchering” schemes in which the scammer builds trust with a victim before stealing their money, Amnesty said."
https://www.reuters.com/sustainability/society-equity/amnest...
The scammers will make friends with someone online, persuade them to deposit increasingly large amounts into a "crypto trading platform", then finally run with the money.
Crypto has created an alternative financial system with many fewer rules. This can either be good or bad depending on the circumstances.
I think it has the potential to be a good thing in the long run. In the short run, however, people need to learn to instinctively distrust crypto as a scam. Especially if the situation involves a friendly attractive lady you've been chatting with online who's really good at trading cryptocurrency and wants to share her secrets with you.
digital_voodoo
It's high fees, burdensome sanctions/AML checks (especially if the said country has been recently or is still on a GAFI list), plus the suboptimization of the core banking systems regarding international transfers, that make the whole things happen in weeks (or sometimes never happen if the end beneficiary doesn't start pinging, emailing or phoning its bank every now and then). The whole unreliability/unpredictability of the thing makes it undesirable for regular operations.
tonyhart7
because their central bank is sucks, simple
dartharva
Why can they not just use America's banking infrastructure directly instead of using America's banking infrastructure indirectly through meaningless overengineered abstractions like stablecoins?
jb_rad
I am not an expert but I don’t believe most countries would allow their citizens to use American banking infrastructure, nor would most American banks accept a foreign account. Stablecoins get around these limitations, while also providing lower fees and higher availability.
skybrian
How do they open the bank account? Looks like a foreigner opening a bank account in the US would need proof that they have a US address. (Or at least, the major banks I checked did.)
dotcoma
> They aren’t as stable as they claim to be, and the stability they do have arises from free-riding on the US banking system and monetary policy – and as we’ll come back to, if stablecoins are able to keep gaining market share, these parasites might eventually endanger their hosts.
ckastner
> PayPal never did seek a banking license, arguing that it wasn’t actually accepting any deposits [...]
That worked in the U.S.
European banking regulators saw through this ploy and forced them to seek a banking license.
cactusfrog
I think the biggest problem with fintech is that the financial system is already decentralized, and full of tech. It really just seems like it involves using unregulated technology, which allows the skipping of restrictive regulations. This might actually be a good thing, but once a path has been proven to be non destructive the banks can just take over the market by begging the government for deregulation.
whateveracct
> It really just seems like it involves using unregulated technology, which allows the skipping of restrictive regulations. This might actually be a good thing
Yeah, it's basically Uber for finance/banking/etc. Reap the free real estate created by rules and regulation by..skirting the rules and regulations.
It also adds indirection, which in turn allows all the parties involved to point fingers at each other Spiderman-style. "Oh I thought $X was responsible for $COMPLIANCE." Eventually, y'all get audited and shape up but that's a years-long process. And in that time you've grown and grown and finance/banking/etc is pretty sticky. Kaching :)
jb_rad
Except that stablecoins are strictly regulated thanks to the GENIUS Act and hopefully the CLARITY Act will provide the same guidelines for crypto as a whole. Gary Gensler did nothing to create regulation. David Sacks is out there doing God’s work.
mattbillenstein
I looked at crypto a little for a startup - the thing that isn't usually mentioned is the huge downside of custody. Not your keys, not your coin - and holding those keys securely, think fire, theft, hacks, backdoored hardware wallets, etc - is really really hard to get correct. And if you mess up once anywhere - poof - all your money is gone and there's nothing you can do to get it back.
nytesky
Yeah who in this world has never had to reset a password? That’s what this means. That laser inscribed metal fob with you keys on it may as well be made of platinum.
And I’ve never felt clear on how people trust wallet, hot or cold — at some point they connect to the internet for transactions, and all the vendors seem suspect. I really doubt most users are building their wallet from code reviewed cryptographically signed source… but maybe I’m wrong?
mattbillenstein
I think most users have no clue how any of it works - there are so many footguns doing it yourself that probably an exchange like Coinbase is the best bet, but again, not your keys, not your coin...
UltraSane
Best you can do is to split your crypto among many different hardware wallets and some metal cold storage wallets. Maybe even try to memorize at least one wallet password. It just seems so stressful.
UltraSane
Exactly. Crypto is like having all of your money as cash that thieves can teleport out of your safe. It must be incredibly stressful to have most of your wealth in crypto knowing this.
H4X0RMan69
[dead]
godelski
A lot of tech is very weird, as the author suggests. It often seems like there's good ideas but everything must go through a hype wave. Unfortunately, the hype wave makes it difficult to distinguish good actors from bad ones. Consequently the bad ones win because it's easier. It's like we've designed everything to be a lemon market. It's like we're not trying to build tech to make life better and make money along the way but to find the most exciting looking or sounding thing and figuring out how much money we can make with it.
I mean look at something like the Rabbit R1. I'm an AI researcher and I saw my peers get fucking excited about it because it was a leap ahead of all the state of the art research we knew. Sorry, but what? It takes time for research to get into a product, sometimes years, even in tech, even in the fast pace AI world. Like you think they put what normally takes at least one $10k GPU and put that into a $200 device? That they could leverage GPT and not have a subscription fee? You're not going to beat ChatGPT by using ChatGPT lol.
Somehow stuff like this keeps happening and we never learn our lesson. Author is right, they're just chasing. And the irony is that that chase is actually preventing us from getting what we're really chasing
willguest
> Actually improving people’s financial wellbeing, for example, will require us to pursue real, slow, piecemeal, democratic solutions.
Democratic solutions are, imho, doomed to failure. In order for them to work a significant portion of "take back control" and "make my country great" brigade will need to have some kind of revelation about the direction of society as a whole. Given the amount of resources pumped into keeping people separate and fighting one-another, this seems like naive optimism.
I consider this to be a woefully inadequate response to a vast, complex and thoroughly embedded set of interconnected issues. Appropriate solutions will require a deep appreciation of complexity science, radically better system design and, frankly, a level of imagination, determination and competence that simply doesn't exist as a social norm, and will not emerge for at least a generation (or three), given that educational and political institutions are so deeply rooted in the current mode.
I don't think Bitcoin is revolutionary - it's just algorithmic scarcity - but I do think that distributed ledgers are an important piece of a future puzzle, as they provide transparency where previously it didn't exist. That said, there are no silver-bullets and not everything should necessarily be held on one.
My position is that, until we actually address the misconception of infinite growth within economic system design (i.e. not by external constraints, such as taxation), we haven't even started. Some may say that Bitcoin already does this, but its capture by the financial sector demonstrates that it is, at best, another asset class.
My anticipation is that this won't happen, so I am fully expecting a kind of looney tunes moment as we race off the side of the cliff. I am interested, not in preventing that from happening, since I think it is inevitable, but rather on planting bushes on the side of the cliff that might give us things to grab as we fall. Feel free to accuse me of either pessimism or optimism.
vivzkestrel
I would like to see aidystopia.com that breaks down all the GPTs and LLMs like this
raytopia
Beside Cryptocurrency and GNU Taler have there been anyother attempts at p2p digital currency?
wmf
There were a bunch of attempts before Bitcoin but they weren't compelling enough to get any users.
fragmede
There was E-gold in 1996 and then there was Paypal and PayPal's doing their own cryptocurrency PyUSD these days.
notpushkin
How do you define “cryptocurrency” and “P2P digital currency”?
yanko
US dollar derivative that will lower government tax collection in long term with all negative consequences... Despite all talks around - financial blow up in next up to 3-6 months is inevitable so brace for impact
dotcoma
Financial blow-up of what kind, in your opinion? The stock market? Loans? Real estate? Crypto? Thanks.
kkfx
Like GNU Taler, who born out of eCash, born out of an idea of David Chaum in 1982 (see https://youtu.be/DDsQCcuST6c for a nice introduction) there was
- https://en.wikipedia.org/wiki/Mondex (Mastercard)
- https://en.wikipedia.org/wiki/Visa_Cash
And there is ongoing from the BIS https://www.bis.org/about/bisih/topics/cbdc/tourbillon.htm beside that there are many CBDC projects designed for inter-banks usages or some for wide public usage.
yieldcrv
I love automated market making and the varying research there
I think this is successful in its goals
Liquidity providing on concentrated liquidity pools is something I would like to see in the high volume US equities market
But will realistically only exist on tokenized platforms that trade their surrogates
It’s extremely lucrative and was only in the domain of market making firms before this technology
TheCowboy
One problem with this is crypto AMM (automated market making) works best with stability and low volatility. For example, it's terrible in the context of prediction markets. Market makers get hosed due to real life, and traders (me) can profit at their expense. It's a big part of why prediction market traders encouraged Polymarket to develop orderbooks. And if crypto is viewed as disruptive, then it's likely inducing greater volatility.
A lot of these things are lucrative until they're not. If they are inherently lucrative then that profit will diminish as people catch on.
yieldcrv
Every market has a use case, and AMMs are not solving event markets, event markets tried to use AMMs and successfully pivoted to order books. I think Polymarket's implementation still has liquidity challenges, as they still have to centrally bribe people to participate. Honestly I don't like Polymarket's contract at all, but it is fast and low cost. Bribes in the solidly AMM model I think were more efficient at attracting liquidity. Slight tangent, the oracle in Polymarket is a bigger issue, people need to convince them to lower the weight of UMA.
back to what I'm a fan of: CLMMs (Concentrated Liquidity Market Maker) is a very competitive field. The level of profits depends solely on volume and amount of capital participating. You are counting on other capital getting bored and moving away, as well as volume rising. Thats the game, it will always be the game. Its already "lucrative until its not" so its not really a gotcha or that insightful for those passing by. I'm glad you have some experience with it.
This is a very American-centric post.
E.g."Stablecoins won’t bank the unbanked, because people get stablecoins by purchasing them on a crypto exchange, and no crypto exchange will open an account for a customer unless they have a bank account."
Well, I understand that US has dystopia level of financial surveillance, but in many places in the world you can change cash in person to crypto without many issues. And you don't need to use any major exchange for that, that defeats the whole point.
And yes, Russians, Iranians, Palestinians are known to use crypto, for example. And the majority of them don't have US bank accounts.
One of the core features of crypto that it's not an American (or anyone else) thing, like paypal, stripe, or any other system and American laws can be easily ignored if both parties are outside of the US. That's already a very liberating feature for at least a billion of people of nations hostile to the US and potentially to 8+ billions of people more.