Stripe Launches L1 Blockchain: Tempo

> a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.

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.

If someone spends significant effort to gather documents proving that their family was forcibly relocated from Poland, they may be able to become a Polish resident and then spend a year or so doing paperwork, bringing all of the documents that are required according to the official web site for some task to the appropriate government office where they are then told that other documents are required, or that nobody in that office even knows what documents are required, and so on, and after that time they may achieve Polish citizenship. You know, in recognition of the fact that their family is in fact Polish. But during that year or so, they may have trouble using the banking system because of sanctions on Russia and because no Polish bank will serve them until they become Polish. So their employer may be on the lookout for alternative payment rails.

> At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.

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?

I think the most disruptive thing about stablecoins is the ability to opt-into your monetary system of choice.

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.

They are all mostly using crypto as a replacement/alternative to centuries old hawala/hundi system.

100% why am I going to use a permissionless blockchain….

To get coins fully controlled by circle.

On a chain with low fees controlled by Coinbase (base) for example.

In this case this new L1 won’t even be distributed by anyone initially too.

It all seems like a Ponzi scheme or small utility for international users. Otherwise I don’t know why you’d trust these centralized authorities.

What stops someone at circle deciding to issue more usdc without real dollar backing

"they don't have to take days to process a transaction" Unlike blockchains, banks are required to check the tx validity against fraud, money laundering, sanction lists, terrorist financing etc, must ensure funds could be returned if a mistake was made. They could not be processed on weekend or at night, because some transactions require manual review by human workers.

The irony is that valid international transactions must be enforced with centralized rules, and thus a decentralized ledger like BitCoin can never operate in this space.

Contradictory requirements.

Does that imply that some day users would be able to pay using Tempo?

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.

I'll attempt an answer:

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

The status quo of cross-border, bank-to-bank money movement today is actually somewhat decentralized:

- 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)

Simple ans. Crypto provides regulatory arbitrage. The steps and process to do the same in Fiat is riddled with regulation and hurddles. the same on crypto side is easy to do as of now. that is it.

> why are businesses finding crypto easier/faster/better?

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.

I sold a blog in early 2021. The seller offered to pay via wire transfer or via Bitcoin.

I chose wire transfer. Which meant going to my bank, getting approval to get paid, fill out two forms, and making three total trips.

I now have contractors in Nigeria and Philippines who want to get paid in USDT. It's instant and there is a thriving local scene of P2P sellers for instant liquidity.

All of the other comments are missing the point: using blockchain technology is a means to bypass regulation. That's it. That's always been the point of cryptocurrency.

In the case of Argentina, and similarly for my country, access to USD is fraught and often involves off-market transactions.

> The problem with all that, is the fact it remains possible to create a protocol with N big institutions [...] This maintains many benefits of the blockchain and lacks many issues (fast, simple, near zero cost)

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.

There's always a comment in any HN blockchain thread where the commenter disproves the need for a blockchain by proposing just to use a blockchain instead.

> signing every block, to create a collaborative system that is perfectly suited for the same task.

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.

I wrote exactly a whitepaper about that, and ironically named it roughchain [1].

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

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My online bank doesn’t support international wire transfers. I had to wire money to a local bank then go to the branch in person, twice, to wire money to my own brother in Europe. He then had to schedule an appointment with his own bank, go in person, and justify why he received such a big transfer, mind you, it was 8k…

So yeah, it’s not about regulation. If crypto can help streamline all this, it’s a net positive

screw regulation when a bank transfer isn't instant and the bank can do all kinds of checks and hold your money hostage for days or weeks.

The GENIUS act enables tech companies to become reserve holders -- buy US Treasuries with customers' money. Stripe offers a "transactional ecosystem" to the customer in stablecoins, the customer gives USD to Stripe in exchange for stablecoins, Stripe buys short-term Treasuries and makes a shitload of money on interest.

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.

The first thing that came to mind to me - and maybe I'm a million miles off here - but all the recent drama around visa / mastercard / etc pressuring sites like Steam to modify their terms of use... maybe Stripe is thinking they can come in and be an alternative by doing it via crypto and hoping their name brings enough trust to cause users to jump on board.

Some of the customer's money is already crypto though

total shot in the dark, but im assuming there is much lower regulatory burden to holding lots of crypto than trying to be a bank

So many of the crypto skeptic comments on this story are massively out of touch with the products and sophistication of the crypto industry. For those of us who aren’t, the question has basically been flipped to “what does a bank add to this situation?” .

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.

There's over 75 billion in daily tether turnover... do the math. Not everyone is a boomer..

Interest rates. Their returns are dependent on what they invest in, which is usually US treasuries (since the token is pegged to USD)

Counterpoint. Tether has grown into one of the most profitable, well funded companies on the planet. Their past growing pains are irrelevant to where they are now. They make $30-50 million per day with just 200 employees. They are the 18th largest holder of US debt, ahead of UAE and Germany. Last year, Tether achieved $14 billion in profit, surpassing Pfizer, Tesla, and BlackRock. https://www.bitget.com/news/detail/12560604740855

Even if they were a fraud, at this point they've made enough money that they could be well capitalized. I'd love to know if they were a fraud (and I suspect they were), but I suspect they got past the "fake it until you make it" hurdle.

Isn't coingeek big SV shills? The whole thing is a fraud starting with its creator Craig Wright.

There are other stablecoins that aren't scams though, like USDC. I think Stripe would probably either create their own USD stable or partner with Circle.

How are you doing it for free, how long does it take, and what happens if something goes wrong?

These are the things companies want. With current methods you must take on risk to move money cheaper, faster, or without chargebacks/etc.

Yep, I mean regulated with respect to who's allowed to offer and hold digital accounts in the currency. Circle itself may not do anything too funky, but big chunks of USD then get stored elsewhere online for banking-like activity in a way that wouldn't be legal with USD — right?

It's entirely at the whim of the US government whether they allow non-KYC foreign people to have USDC accounts.

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.

> One way of thinking about a blockchain is to think of it as a shared datastructure to keep databases in sync. Any time you want to distribute your database over more than just a single central place, in a cryptographically secure way, you're probably going to re-invent a blockchain to do it.

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.

I understand all of this and I stand by my claim of pointlessness.

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.

this is such a bizarre position, what you're describing has been not only possible but actually implemented in real-world systems for decades before even the idea of a blockchain was thought up

blockchains solve a self-invented problem

Whoever controls the protocol and network nodes can indeed unilaterally alter the blockchain just like any other data structure.

You can sign records in a normal database. Implement some segregation of duty and don't give your DB admins access to any signing keys.

But this is a classical consensus setup where stripe has a front door to change anything about the network they want.

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

you get enough voting power and you can fork any blockchain to whatever state you want, no different than an admin doing an upsert

Stripe would never create a blockchain they can't control, because if it has anything to do with fiat then it's going to need to have that control. I have an extremely high suspicion they have some sort of admin access.

Which is by the DAO exploit on Ethereum was successful and not rolledback by the Ethereum Devs.

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

Can you name any significant economic fallout of any kind related to this attack vector?

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

yeah, I guess a slow and shitty distributed database where there's no way to recover a lost or forgotten password (private key)

Well yeah, that's the point.

It's a LOT more than that. You are still stuck in satoshi-era. Things have evolved quite a bit that it's no longer just a db sync

The fees and slowness of BTC have essentially rendered it unusable as a "real cryptocurrency" and is more-or-less just being taken over by the banks.

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?

I think this may be an insightful comment.

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.

All pointless.

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.

> the non existent "Database driven", uhh money tools.

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?

Could you give an example of such a "money related feature"?

> No, instead it is about a whole variety of money related features and developer ecosystems that simply do not exist outside of the crypto space.

Like what? Speculation?

Monero got 51% attacked

Stellar was my first thought too. I predicted it would take over the low-value transaction / fintech crypto space with their fast transaction times, low fees, spam protection, and bank buy-in but it just went nowhere. sigh

It's still there though. Why not use it?

It is possible to say that about many technologies, e.g. planes, websites, apps, even games.

All cryptography is about solving coordination problems

At the end of the day, you are supplanting a monopoly with another and distracting from the main purpose of cryptocurrency which is to eliminate the monopoly role altogether.

> due to regulation

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

The controller of the stablecoin has full custody, whether or not regulators realize it.

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.

How will you redeem your stable coin without some interaction with and approval from a bank? Where do you think the stable coin issuers hold their dollars?

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

Despite the crypto hype massively dying down there's still a ton of idiots and grifters believing in it in big corps (including banks). Stripe could be targeting that and believes they'd be able to extract more money out of those idiots than what it costs to run this blockchain. This could work as long as they're careful enough not to get high on their own supply.

Given my past experiences trying to get EU-compliant invoices for Stripe transactions this is unfortunately also how I feel about the situation. This decentralization has immediate benefits for plausible deniability.

exactly. This is the main value of the "web3" era of blockchains. There's absolutely no decentralization in the way they are governed. It's just enough decentralization so that it can be argued that the users are interacting with a piece of software that the developers wrote, rather than the developers themselves, so that way there's no legal relationship between the two.

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.

it depends, regulators can still force validators to censor. I have kept up with the scene in a minute, but i remember builders and even some wallets were dropping tx from tornado cash because of some compliance issues, dont think the trump admin would care

very well put. its been the game the whole time.

Like many L1s that have become Ethereum L2, so will this in time.

aka not decentralized at all

That is a private Ethereum instance, right?