I just want to easily pull bank/card transactions into my budget app, and the glacial pace of open banking really annoys me. The pace in Canada has been just as slow, although we have Interac for direct person to person transfers already so I'm not sure how much the issue of direct payments applies there.
It's really just f**ing ridiculous that some of the earliest and most important digital systems we have are allowed to wall in their data with no API access. Banks suck so goddamn hard and are allowed to operate without any real competition and don't innovate at all. They are the definition of regulatory capture.
> allowed to wall in their data with no API access
There's PSD2 in the EU (or Eurozone? Not sure actually). Basically forces banks to open common APIs to encourage interopability and competition. However, it's not aimed at users but rather at companies in fintech building applications.
Some banks (Bunq comes to mind) offer APIs to their customers for direct use, but most don't. The reason is obviously security. People still fall for phishing, people still give fake bank staff their access codes on the phone. Giving normal users a way to have API access to their bank account would be disastrous for many of those users.
Now, it would be nice if things like PSD2 were a little more accessible and transparent. Currently you need permission from an institution like The National Bank to gain access. It's expensive and bureaucratic.
It's a great idea, but it's been killed off by the small print that was lobbied into the requirements
Basically, banks force apps or users to require you fully revalidate user consent every 90 days. And it's quite an annoying process. That means any app or integration you want to build, requires 10 minutes of your time every 90 days or they stop working. It's killed many Fintech's.
It all works on paper, but is drafted into law by politicians who have no clue about technical challenges and user experience. So in the end, it works exactly as designed by the banks: it doesn't
Requiring up to date authentication in order to access a bank account makes sense though. Do you get annoyed at having to enter your PIN when using an ATM?
The method I use now (SimpleFIN) requires me to reauth with a text based OTP every single day, for each of my bank accounts/cards. It also voids some consumer protections. In practice I only sync once in a few days to avoid that pain. A somewhat supported way with auth once every 90 days sounds like a dream.
It's for SEPA area BUT it's mandatory open only for PSPs/financial institutions cutting out end customers... Also most banks have a terribly limited support. Personally I use OpenBank APUs (PSD2/DSP2) for some banks (ironically via a Canadian operator, GoCardless) and well... generic accounts are supported, stocks are not, bank cards are not etc, most exports have very poor quality.
Long story short I can auto-import in Firefly III from EU banks only via a Canadian company and the quality of the process NOT due to GoCardless but due to local banks is terrible...
At the time I was using ledger for personal accounting. Ledger is amazing and incredibly flexible. Writing the journals with detailed financial data is way too time consuming though.
I tried to write software to pull this data from the banks. Got in touch with the managers at my bank and everything, they even referred me to their devs. I just needed read only access to my own bank account.
I eventually discovered I needed permission from the goddamn central bank to do this.
I also tried to integrate with my government's electronic consumer receipt systems. The idea was I'd scan the receipt with my phone or laptop camera and it'd download the data and automatically generate a detailed ledger journal entry with individual postings and metadata for every product I purchased. This was going to save me so much time it's not even funny.
I discovered I had to create a corporation to even ask the government for API access to my own data.
"Open Banking" is just… not open at all. Misleading name.
Had similar idea - just to pull my own data, tag transactions, etc etc, and have a nice stats. Nope, it is so "open" that it's just impossible to pass for single-user idea. "Open Banking" just gives me opportunity to show in my Bank A part of data from Bank B.
I am thinking if I am in the minorities or such practice isn't common across the world where I have many credit cards and bank accounts. I am willing to pay $5 dollars a month just for such services. A single places where it shows All my current accounts balance, auto pay all credit cards bills on payment date. Showing all my current credit card spendings this month, remaining ( next invoice ) and where they belongs to, mostly dinning.
I would have thought Apple Pay and Mobile Payment would pave the way for better Credit Card services, but right now most of them are glibbest on the statement. I dont remember which restaurant it is nor does it correctly show.
I basically want a central place for all my finance. Including discount on credit cards, savings, interest rate loan etc. And I am willing to pay a small fees for it.
> Banks suck so goddamn hard and are allowed to operate without any real competition and don't innovate at all.
It's not really the banks' fault. They're all stuck leasing expensive information systems from entrenched third-party technology shops. They don't have software development dollars and they are extremely risk averse, to a paranoid degree. Thank the regulatory environment for that (state and federal).
Companies like Moov.io are trying to crack open this space and provide the levels of integration we see in other industries.
Bitcoin does seem like a great store of value, but as far as I know transacting with it is still quite expensive, and obviously not accepted in most places. Watching the USD be devalued in real time while BTC or Gold maintain value does drive home its utility as a store of value for sure.
But I can't buy groceries or pay rent with it, so i don't see how it works for the usecase I was talking about above. There's lots of ways to convert back and forth but you pay fees on each conversion so it's not economical to use for payments.
I use a decentralized global ledger and can make instantaneous peer to peer payments to anyone on the planet. I'm not just my own bank, I participate in a system that replaces central banks and provides a money that isn't constantly devalued. It's called bitcoin.
I don't receive my salary in Bitcoin and I can't pay my groceries, rent or taxes with it. People own Bitcoin because they expect prices to rise further, not for its utility.
Lol, I was paid in bitcoin and have paid for all kinds of stuff in bitcoin. That you don't is meaningless to me. People own Bitcoin because they know that fiat money is guaranteed to lose value. If you don't see the utility of having a money that can't be printed out of thin air, I congratulate you for being financially privileged.
You might have been paid in bit coins, but the value of these bitcoins has to be declared at the day of transfer so you can pay taxes in your local fiat currency.
Nobody are disputing that it is a really bad idea to hold cash above an emergency fund. Everyone is highly discouraging you from doing it. Buy ETFs, stocks, houses, cars, cyrpto whatever you need - just don't hold large amounts of cash.
All in all, it makes a very little difference what you are paid in - just that you have extra hoops to pay your taxes now that you are paid in bitcoins.
> Nobody are disputing that it is a really bad idea to hold cash above an emergency fund. Everyone is highly discouraging you from doing it.
So you know that modern money doesn't fulfill one of the central uses of money that was known since the antiquity: store of value. And you know that people have to waste time to learn about investments instead of working their jobs and enjoying their time off. But you still think fiat money is great?
This explains your excitement! Great that you can leach on other people.
> But you still think fiat money is great?
Seriously, where did you get that from? I never argued for fiat money. I just said that bitcoins is not a currency by the ordinary understanding of a currency.
So the miners safeguard your money (hopefully), they are also responsible for actually transmitting your money (hopefully), and you don't take any deposits or make loans to customers.
You don't hold your own money, you don't manage transferring your own money, you basically don't do any of the things a bank does. How does that make you your own bank exactly?
Miners are not "responsible" for transmitting my money, that's on me, and I incentivize them. I'm also a miner btw. As I'm my own bank, and nobody elses, I obviously don't take deposits or make loans. I couldn't make "loans" as banks do anyway, as bank loans generate new money, and that's the main reason why I bitcoin. What's coming next, I don't wash cartel money, so I'm not a bank?
Bitcoin can not yet be deemed currency by commonly understood principles for a currency: You can not pay your taxes, it is not a store of value (it is volatile), and it can not generally be used to transact (Good luck getting trader joe accepting bit coins).
So that would not really constitute a bank that stores currency.
(I have nothing on crypto currencies, btw., and if it gives a feeling of agency to use them I applaud it)
If you start from there, you'll never understand bitcoin. I own bitcoin precisely because it is not what economists, bankers and politicians want me to own.
I don't really know what the goal of this comment is?
This thread was not about understanding bitcoins - but banking.
> I own bitcoin precisely because it is not what economists, bankers and politicians want me to own.
It doesn't really make sense to own something just because someone else are saying you should not own it - but whatever floats your boat and as long as your own the consequences of your own actions.
Bitcoin's high volatility means that it's impossible to predict exactly how much value one Bitcoin will have tomorrow, next month, next year, or next decade. USD has comparatively low volatility. It's possible, but very unlikely, for USD to go to zero tomorrow, and while the uncertainty around exactly how likely USD is to collapse increases as you look further towards the future, most people would consider it less likely for USD to collapse than Bitcoin. Since markets are made up of "most people", most people are more willing to accept USD to exchange value than they are Bitcoin. Therefore, USD is a better store of value than Bitcoin
Prediction that has been right 100% of the time (so far): Bitcoin's value will be more in the future.
Now that stonk people are in to BTC and it's worth is much higher, it's volatility is far less. It's still a speculative asset and with plenty of risk, but it's definitely a store of value for at least some % of one's savings.
No mention of how open banking works outside of the US, where (in the UK) bank transfers are basically instantaneous and free, and I can happily retrieve my payments list to my budgeting app.
> and I can happily retrieve my payments list to my budgeting app
Is this a UK thing? I've been searching for something like Mint/Quicken in the EU and haven't found anything worthwhile because there doesn't seem to be a standard for budgeting apps to connect to banks.
Open banking does that but it needs to be a provider.
Some banks let you download in formats that let you then import into something. I have imported a lot into Gnucash from a downloaded file but its not smooth or complete (narrative needed fixing).
Remember the Synapse/Yotta/Evolve collapse.[1] That is what happens when a fintech startup has authority to manipulate customer bank accounts
but is not financially strong enough to handle problems.
I would argue, the issue is that they had exclusive control over the customers bank accounts. I have no problem with fintech that integrates with existing accounts over the top.
The issue is with fintechs that are not really banks, so they keep your money in a "program bank" where you are not the direct customer. You can't go to the program bank and say Fintech XYZ went belly up and I want my money, because you are not the banks direct customer (even though in some cases your name is legally on the account for FDIC insurance reasons).
Open banking tech is way more about the former than the latter.
To be clear, the Synapse case is not clearly a financial strength issue in the sense that they took risks with customer funds, but rather an extremely serious record keeping/accounting/auditing one. Synapse was supposed to be nothing more than a "dumb pipe" between customers, fintechs, and underlying traditional bank accounts.
That's the problem with those things. Who's responsible for plumbing leaks?
A sizable fraction of what bank employees do involves error conditions and fraud. The happy path has been automated for decades. One of the big discoveries when PayPal started up was that they were not in the money transfer business. They were in the fraud prevention business.
The entire banking industry is the most backwards, outdated and barely functioning sector in the whole world. I have no clue how we have not yet collapsed the financial system via some hack or basic data loss.
As someone working in fintech (in Europe): I agree. People always say "well at least it's tested and works!" but fintech is pure bullshittery. We wrap shiny new apps over 30 year old legacy systems written in C++ and bank employees need to constantly correct data manually. I know from a bank that has only one employee that knows about the whole system and nobody knows what happens when they retire (is already aged >50). Generally, banks rely on a very small number of (overworked) people that prevent the whole system from collapsing and they will all retire in a few years. Neo-banks and Neo-broker have their own disadvantages (like bad support, etc.) but at least they are forward-thinking.
Everything is also constantly regulated to death (and not the good kind) and banks wait until the very last day (even when regulations were passed at EU-level 6 years (!!) ago) and you then need to rush implementing it in the last month.
After working there for a few years now it's hard to trust any bank. Better not think too hard about it...
> I have no clue how we have not yet collapsed the financial system via some hack or basic data loss.
Banks are pretty good at not losing data. They're also pretty good at layered security.
I mean there's fraud and theft on all levels, but collapse-level events don't come from "a hack or basic data loss". They come from political incompetence and large scale economic events.
Except for that day I logged into Barclays Bank (in the UK) and half the transactions were missing from the last several months of statements.
We're talking maybe 50 transactions just gone from the bank account ledger, which had long since been settled and previously downloaded (that's how I noticed).
To be fair to them, the transactions reappeared a few days later. But it took days, and had me quite worried.
I most certainly am not. But there's certainly fraud in those places too. There is all kinds of frauds within banking, from insider trading to cleverly hidden rounding errors being pocketed by software engineers, and everything in between.
Many/most banks are also issuing banks (which means that they issue V/MC cards to their users). And fundamentally credit and debit cards are a source of credit risk and fraud for those banks.
We have many times. We've ruined lives and literally killed people over it, but we just accept this is how money works. We couldn't possibly consider changing The System because The System is perfect, all-knowing and benevolent. Trust in The System!
Also there's a bunch of really annoying and expensive processes for rich people to get their money back after an error, so they don't see any problem.
with all the self-custody crypto cards available right now I completely stopped using bank accounts. Can easily pull the data from the ledger and automate payments as I wish
> In the intervening years, that competition has arrived. The banks do not like it, and would prefer it if it went away.
This is the conclusion of most articles about such topics. The conclusion is that we need less "knuckle-raps". Instead, a crippling sledgehammer blow to both kneecaps followed by a warning that the next will be to the skull (of the company, to be clear) unless the banks entirely capitulate, accept a massive reduction in profits and executive pay, and fully open their entire systems.
HN darling but ... thumbs down. Seemingly no insight. Long read (skipped most). IMHO largely valueless opine and supposition. I think we already know bankers bank, corporations can't innovate, and regulations are abused for protectionism.
I had a funny chat in the 90s with soneone in charge of a bank. The thing was, they wanted me to supply a business plan. I know how to write those but find it mysterious that they want me to write it for all completely unorriginal businesses. If one wants to start a shoe store one should simply investigate the demography and map the varous shoe stores nearby. The bank is in a position to do that cheaply for their entire service area. Innovation would be to put the opportunities in the window display. Their standard plan can have everything they look for. No need to complaint that the guy who hapoens to be good at baking bread forgot something. If the data checks out you can give much larger lones with more interest. If there are many holes in the coverage you sell someone a lone for a franchise. It was a funny chat because everything was impossible, even a bank director should not submit ideas.
The bank isn't so interested in whether it's a good idea to open a shoe store or not, but in whether you as the person asking for lending has the skillset to actually execute on that plan. Asking the person who wants lending to write the plan is the easiest way to check this.
It's only even half about the business. Instead it is about the businessman making the pitch.
If someone is good at baking bread that suggest they are qualified to to bake bread. Running a bakery is a super set of that skill. The business plan request is a fantastic method to give such a person a chance to show they have the right resources, enough experience, and reasonable expectations and strong commitment.
Why does every employee in the US need to pay an accountant to file their corporate payroll taxes, when the corporation knows how much they paid and can just use THEIR accountant to report this same information? It would be standard across many employees. And in Europe that’s largely what’s done. But in USA this creates many “bullshit jobs”. The IRS just closed their free file under Trump admin, and even when they had it, you had no way to electronically submit business taxes, and even if you mailed those to the IRS (still allowed) some states have NO WAY for you to file taxes without an accountant!
To open an LLC in NY you must announce it in a specific newspaper they tell you. And that newspaper charges $700. Same thing — they lobby to keep this going.
> Why does every employee in the US need to pay an accountant to file their corporate payroll taxes, when the corporation knows how much they paid and can just use THEIR accountant to report this same information?
How would my employer know how much money my savings, chequing and investment accounts make? I owe taxes on all of those as well as on my income.
How would my employer know what interest I pay on my mortgage, how much I contribute to charity and my other deductible expenses?
> some states have NO WAY for you to file taxes without an accountant
>Why does every employee in the US need to pay an accountant to file their corporate payroll taxes, when the corporation knows how much they paid and can just use THEIR accountant to report this same information?
You don't need an accountant, and employees do not pay "corporate payroll taxes", they usually just pay income tax to the federal government.
And if you think tax liability is based solely on amount of pay received from an employer, then I think you must not have any experience with paying income taxes in the US.
>The IRS just closed their free file under Trump admin
Free Fillable Forms is still available for electronic submissions. What closed was the government provided alternative to guided tax preparation software like TurboTax.
> some states have NO WAY for you to file taxes without an accountant!
HN anathema: crypto and blockchain — can and does trivially solve the issues Patrick writes about. You can easily make sure the account has enough money, without knowing whose account it is. Crypto is “buyer beware”. The traditional fintech system is “seller beware”. But crypto is programmable and in theory you could easily make use of arbitration, resolution of disputes, and periodic payouts etc. All without being forced into the bundle of services you don’t control, that banks saddle you with.
Crypto and blockchain by itself does not solve any of these problems. It's merely a payments system that happens to be on a computer natively. There's nothing technical preventing banks from getting together and making Open Banking a well-supported thing like they're supposed to be doing; it's all just code and contracts in the end. It's not that they can't, it's that they won't, and they won't for business and political reasons. Crypto is subject to the same pressures but doesn't have the same regulations to constrain their actions. Crypto's better ability to eg do international payments is not because of any technical reason but simply because they don't have the same regulations and inertia of the traditional banking system. While the traditional banking system has problems with its regulations making things too hard to do, many people prefer it to the easier to screw up wild west of crypto payments. Lots of people like the FDIC making sure their savings aren't wiped out if the bank lies on its balance sheet, or the ability to claw back money transfers if someone breaks into their account. Crypto could certainly provide those services and backstops, but they haven't yet, and based on the prevailing attitude amongst the major participants, it's unlikely they will anytime soon. The only real difference between crypto and banks as a payments system is whether or not you want to start from scratch and build up, or start with the existing morass and tear down. The latter is the safer option which many people prefer when it concerns their money
As an honest person, that makes sense. Unfortunately, the world is filled with people who are not. If I have to give my money to Alice to give it to Bob because Alice is the only person with a way to get it to Bob, I'm trusting Alice to just do that. But Alice is a business woman and is doing this for lots of people. One day, Alice just disappears with everybody's money. All of the people that relied on Alice to get money to Bob just got screwed. So then they make a bunch of rules and regulations so that doesn't happen again.
MTLs, money transmission licenses exist to say you can’t legally handle other people’s money without proving you’re trustworthy, solvent, and compliant with anti-crime laws.
Who's permission do you need to be allowed to accept $10 in cash? I mean there are regulations but that is usually not related directly to the cash payment itself but rather that you know you might need to pay taxes or there is regulation that you can't commit terrorist acts and you know that could be the blocker but then it's not really the cash payment that is needing permission. And again, nothing that Bitcoin or other crypto is solving because you still would have to have the same kind of permission or just not care about the permission but you can do that with cash too.
My actual problem is that the central bank devalues the money I earned. I'm glad to hear that the financial system works for you, and that you have zero problems making transactions to anybody on the planet. That's not true for a lot of people.
The second law of thermodynamics devalues the money you earned. There's no way you can have $10 that always and forever buys the same things $10 currently does.
Central banks keep its value higher than the alternative, as anyone who doesn't have oppositional defiance disorder would notice from the fact that we haven't had a Great Depression lately. Because it really gets devalued if there's an economic collapse and all the businesses you trade with cease to exist.
Have you ever heard of gold? That didn't continuously lose value. I'm sorry to hear you believe the nonsense modern economists, bankers and politicians tell you.
If you value being able to purchase a specific good X, and they stop making it, then you now don't have currency capable of buying it. Doesn't matter what kind of currency it is.
If you're using value in dollar value, that asset has the price behavior it does because we live in a stable economy with central banks, 2% inflation targeting and so on. You haven't seen the alternative because you'd be on the street.
Anytime I've tried to buy something with crypto, the fees have been an order of magnitude higher than interchange (credit card) fees. And unlike credit cards, the cost is put on me not the merchant.
There one Blockchain is used for memes, but it's actually very efficient one and the fees are very low. Where i live we use to move USDC between accounts very easily.
You can't be sure of anything just because a crypto wallet appears to have a number in it, because the legal system exists, and judges don't care what you think a number means if they think something different.
Mainly this comes up during bankruptcy, but they can also just order you to return stolen funds you've received even if you would prefer not to do that.
I just want to easily pull bank/card transactions into my budget app, and the glacial pace of open banking really annoys me. The pace in Canada has been just as slow, although we have Interac for direct person to person transfers already so I'm not sure how much the issue of direct payments applies there.
It's really just f**ing ridiculous that some of the earliest and most important digital systems we have are allowed to wall in their data with no API access. Banks suck so goddamn hard and are allowed to operate without any real competition and don't innovate at all. They are the definition of regulatory capture.
> allowed to wall in their data with no API access
There's PSD2 in the EU (or Eurozone? Not sure actually). Basically forces banks to open common APIs to encourage interopability and competition. However, it's not aimed at users but rather at companies in fintech building applications.
Some banks (Bunq comes to mind) offer APIs to their customers for direct use, but most don't. The reason is obviously security. People still fall for phishing, people still give fake bank staff their access codes on the phone. Giving normal users a way to have API access to their bank account would be disastrous for many of those users.
Now, it would be nice if things like PSD2 were a little more accessible and transparent. Currently you need permission from an institution like The National Bank to gain access. It's expensive and bureaucratic.
It's a great idea, but it's been killed off by the small print that was lobbied into the requirements
Basically, banks force apps or users to require you fully revalidate user consent every 90 days. And it's quite an annoying process. That means any app or integration you want to build, requires 10 minutes of your time every 90 days or they stop working. It's killed many Fintech's.
It all works on paper, but is drafted into law by politicians who have no clue about technical challenges and user experience. So in the end, it works exactly as designed by the banks: it doesn't
Requiring up to date authentication in order to access a bank account makes sense though. Do you get annoyed at having to enter your PIN when using an ATM?
The method I use now (SimpleFIN) requires me to reauth with a text based OTP every single day, for each of my bank accounts/cards. It also voids some consumer protections. In practice I only sync once in a few days to avoid that pain. A somewhat supported way with auth once every 90 days sounds like a dream.
180 days (changed recently)
I'd be more than happy with read-only access. Still potentially bad for 'normal users' but not disastrous.
It's for SEPA area BUT it's mandatory open only for PSPs/financial institutions cutting out end customers... Also most banks have a terribly limited support. Personally I use OpenBank APUs (PSD2/DSP2) for some banks (ironically via a Canadian operator, GoCardless) and well... generic accounts are supported, stocks are not, bank cards are not etc, most exports have very poor quality.
Long story short I can auto-import in Firefly III from EU banks only via a Canadian company and the quality of the process NOT due to GoCardless but due to local banks is terrible...
That's why stablecoins are booming...
I was really disappointed by that. I still can't easily retrieve a list of my transactions.
I am very happy with that, because it means the PSD2 providers have their security tested before they are accepted.
Yes, PSD2 is overall an excellent thing. I used to be able to scrape my data with just a username and a password. This is a massive improvement.
I tried to do something similar not too long ago.
At the time I was using ledger for personal accounting. Ledger is amazing and incredibly flexible. Writing the journals with detailed financial data is way too time consuming though.
I tried to write software to pull this data from the banks. Got in touch with the managers at my bank and everything, they even referred me to their devs. I just needed read only access to my own bank account.
I eventually discovered I needed permission from the goddamn central bank to do this.
I also tried to integrate with my government's electronic consumer receipt systems. The idea was I'd scan the receipt with my phone or laptop camera and it'd download the data and automatically generate a detailed ledger journal entry with individual postings and metadata for every product I purchased. This was going to save me so much time it's not even funny.
I discovered I had to create a corporation to even ask the government for API access to my own data.
^ this.
"Open Banking" is just… not open at all. Misleading name.
Had similar idea - just to pull my own data, tag transactions, etc etc, and have a nice stats. Nope, it is so "open" that it's just impossible to pass for single-user idea. "Open Banking" just gives me opportunity to show in my Bank A part of data from Bank B.
If you're in the EU it might be worth checking out if TrueLayer support your bank.
I am thinking if I am in the minorities or such practice isn't common across the world where I have many credit cards and bank accounts. I am willing to pay $5 dollars a month just for such services. A single places where it shows All my current accounts balance, auto pay all credit cards bills on payment date. Showing all my current credit card spendings this month, remaining ( next invoice ) and where they belongs to, mostly dinning.
I would have thought Apple Pay and Mobile Payment would pave the way for better Credit Card services, but right now most of them are glibbest on the statement. I dont remember which restaurant it is nor does it correctly show.
I basically want a central place for all my finance. Including discount on credit cards, savings, interest rate loan etc. And I am willing to pay a small fees for it.
> Banks suck so goddamn hard and are allowed to operate without any real competition and don't innovate at all.
It's not really the banks' fault. They're all stuck leasing expensive information systems from entrenched third-party technology shops. They don't have software development dollars and they are extremely risk averse, to a paranoid degree. Thank the regulatory environment for that (state and federal).
Companies like Moov.io are trying to crack open this space and provide the levels of integration we see in other industries.
But it's really hard and slow.
This is not the problem. If it was the problem then banks in (most of) the rest of the world would also be stuck 50 years in the past. They're not.
Other countries' banks don't have the US regulatory environment.
Yes, they do. The UK and Australia (examples I know) have equally stringent regulatory environments as the USA.
That's why Im really bullish on Column, a tech company with banking license
Isn’t that basically every neobank?
They don’t have banking licenses, at least not in the US
This is only true of small banks, not large ones.
I feel you, that’s why I’m my own bank.
Bitcoin does seem like a great store of value, but as far as I know transacting with it is still quite expensive, and obviously not accepted in most places. Watching the USD be devalued in real time while BTC or Gold maintain value does drive home its utility as a store of value for sure.
But I can't buy groceries or pay rent with it, so i don't see how it works for the usecase I was talking about above. There's lots of ways to convert back and forth but you pay fees on each conversion so it's not economical to use for payments.
What does it mean that you are your won bank?
Do you treat your matrass like a bank? Maybe with the pidgin carrier protocol to do money transfers?
I use a decentralized global ledger and can make instantaneous peer to peer payments to anyone on the planet. I'm not just my own bank, I participate in a system that replaces central banks and provides a money that isn't constantly devalued. It's called bitcoin.
I don't receive my salary in Bitcoin and I can't pay my groceries, rent or taxes with it. People own Bitcoin because they expect prices to rise further, not for its utility.
Lol, I was paid in bitcoin and have paid for all kinds of stuff in bitcoin. That you don't is meaningless to me. People own Bitcoin because they know that fiat money is guaranteed to lose value. If you don't see the utility of having a money that can't be printed out of thin air, I congratulate you for being financially privileged.
There are some huge misunderstanding here:
You might have been paid in bit coins, but the value of these bitcoins has to be declared at the day of transfer so you can pay taxes in your local fiat currency.
Nobody are disputing that it is a really bad idea to hold cash above an emergency fund. Everyone is highly discouraging you from doing it. Buy ETFs, stocks, houses, cars, cyrpto whatever you need - just don't hold large amounts of cash.
All in all, it makes a very little difference what you are paid in - just that you have extra hoops to pay your taxes now that you are paid in bitcoins.
I pay zero taxes on bitcoin, legally.
> Nobody are disputing that it is a really bad idea to hold cash above an emergency fund. Everyone is highly discouraging you from doing it.
So you know that modern money doesn't fulfill one of the central uses of money that was known since the antiquity: store of value. And you know that people have to waste time to learn about investments instead of working their jobs and enjoying their time off. But you still think fiat money is great?
> I pay zero taxes on bitcoin, legally.
This explains your excitement! Great that you can leach on other people.
> But you still think fiat money is great?
Seriously, where did you get that from? I never argued for fiat money. I just said that bitcoins is not a currency by the ordinary understanding of a currency.
So the miners safeguard your money (hopefully), they are also responsible for actually transmitting your money (hopefully), and you don't take any deposits or make loans to customers.
You don't hold your own money, you don't manage transferring your own money, you basically don't do any of the things a bank does. How does that make you your own bank exactly?
Miners are not "responsible" for transmitting my money, that's on me, and I incentivize them. I'm also a miner btw. As I'm my own bank, and nobody elses, I obviously don't take deposits or make loans. I couldn't make "loans" as banks do anyway, as bank loans generate new money, and that's the main reason why I bitcoin. What's coming next, I don't wash cartel money, so I'm not a bank?
Being able to send a commodity to other people is not what people or regulators mean when they talk about something being a bank.
Bitcoin can not yet be deemed currency by commonly understood principles for a currency: You can not pay your taxes, it is not a store of value (it is volatile), and it can not generally be used to transact (Good luck getting trader joe accepting bit coins).
So that would not really constitute a bank that stores currency.
(I have nothing on crypto currencies, btw., and if it gives a feeling of agency to use them I applaud it)
> commonly understood principles for a currency
If you start from there, you'll never understand bitcoin. I own bitcoin precisely because it is not what economists, bankers and politicians want me to own.
I don't really know what the goal of this comment is?
This thread was not about understanding bitcoins - but banking.
> I own bitcoin precisely because it is not what economists, bankers and politicians want me to own.
It doesn't really make sense to own something just because someone else are saying you should not own it - but whatever floats your boat and as long as your own the consequences of your own actions.
Bitcoin is a better store of value than USD. Change my mind.
Bitcoin's high volatility means that it's impossible to predict exactly how much value one Bitcoin will have tomorrow, next month, next year, or next decade. USD has comparatively low volatility. It's possible, but very unlikely, for USD to go to zero tomorrow, and while the uncertainty around exactly how likely USD is to collapse increases as you look further towards the future, most people would consider it less likely for USD to collapse than Bitcoin. Since markets are made up of "most people", most people are more willing to accept USD to exchange value than they are Bitcoin. Therefore, USD is a better store of value than Bitcoin
Prediction that has been right 100% of the time (so far): Bitcoin's value will be more in the future.
Now that stonk people are in to BTC and it's worth is much higher, it's volatility is far less. It's still a speculative asset and with plenty of risk, but it's definitely a store of value for at least some % of one's savings.
just move everything to a public chain and it becomes easy
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No mention of how open banking works outside of the US, where (in the UK) bank transfers are basically instantaneous and free, and I can happily retrieve my payments list to my budgeting app.
> and I can happily retrieve my payments list to my budgeting app
Is this a UK thing? I've been searching for something like Mint/Quicken in the EU and haven't found anything worthwhile because there doesn't seem to be a standard for budgeting apps to connect to banks.
Yes, there is Open Banking in the UK: https://www.openbanking.org.uk/ It's the UK version of PSD2 so there should be equivalent schemes in Europe.
Not that it really is as open as many of us might like - the banks did a pretty good job of tying much of it up in red tape.
I use the GoCardless API to pull transactions and balances into a Google Sheet. They have pretty good coverage for UK and EU it looks like [1]
[1] https://developer.gocardless.com/bank-account-data/overview#...
PSD2 is that standard.
I personally use Finanzguru (for the German market, it supports many banks).
Likely to be many others.
Seems like my bank started supporting it last year. Will check it out.
Clearly, I must have been searching wrong!
Open banking does that but it needs to be a provider.
Some banks let you download in formats that let you then import into something. I have imported a lot into Gnucash from a downloaded file but its not smooth or complete (narrative needed fixing).
A quick search shows this one is well regarded https://www.bilanceapp.com/
Interesting... in that it apparently has the exact same limitations as my bank's built-in finance tracking feature (including being mobile-only).
Also Australia.
Remember the Synapse/Yotta/Evolve collapse.[1] That is what happens when a fintech startup has authority to manipulate customer bank accounts but is not financially strong enough to handle problems.
[1] https://apnews.com/article/synapse-evolve-bank-fintech-accou...
I would argue, the issue is that they had exclusive control over the customers bank accounts. I have no problem with fintech that integrates with existing accounts over the top.
The issue is with fintechs that are not really banks, so they keep your money in a "program bank" where you are not the direct customer. You can't go to the program bank and say Fintech XYZ went belly up and I want my money, because you are not the banks direct customer (even though in some cases your name is legally on the account for FDIC insurance reasons).
Open banking tech is way more about the former than the latter.
To be clear, the Synapse case is not clearly a financial strength issue in the sense that they took risks with customer funds, but rather an extremely serious record keeping/accounting/auditing one. Synapse was supposed to be nothing more than a "dumb pipe" between customers, fintechs, and underlying traditional bank accounts.
That's the problem with those things. Who's responsible for plumbing leaks?
A sizable fraction of what bank employees do involves error conditions and fraud. The happy path has been automated for decades. One of the big discoveries when PayPal started up was that they were not in the money transfer business. They were in the fraud prevention business.
The entire banking industry is the most backwards, outdated and barely functioning sector in the whole world. I have no clue how we have not yet collapsed the financial system via some hack or basic data loss.
As someone working in fintech (in Europe): I agree. People always say "well at least it's tested and works!" but fintech is pure bullshittery. We wrap shiny new apps over 30 year old legacy systems written in C++ and bank employees need to constantly correct data manually. I know from a bank that has only one employee that knows about the whole system and nobody knows what happens when they retire (is already aged >50). Generally, banks rely on a very small number of (overworked) people that prevent the whole system from collapsing and they will all retire in a few years. Neo-banks and Neo-broker have their own disadvantages (like bad support, etc.) but at least they are forward-thinking.
Everything is also constantly regulated to death (and not the good kind) and banks wait until the very last day (even when regulations were passed at EU-level 6 years (!!) ago) and you then need to rush implementing it in the last month.
After working there for a few years now it's hard to trust any bank. Better not think too hard about it...
Oh man, so true. Don't even get me started on the red tape in EU.
use the open source tech made for public blockchains and use that to build new banking rales for public/semi public banking networks
> I have no clue how we have not yet collapsed the financial system via some hack or basic data loss.
Sometimes not moving fast and not breaking things has its advantages.
Have you considered that people who aren't you aren't all complete morons?
> I have no clue how we have not yet collapsed the financial system via some hack or basic data loss.
Banks are pretty good at not losing data. They're also pretty good at layered security.
I mean there's fraud and theft on all levels, but collapse-level events don't come from "a hack or basic data loss". They come from political incompetence and large scale economic events.
> Banks are pretty good at not losing data
Except for that day I logged into Barclays Bank (in the UK) and half the transactions were missing from the last several months of statements.
We're talking maybe 50 transactions just gone from the bank account ledger, which had long since been settled and previously downloaded (that's how I noticed).
To be fair to them, the transactions reappeared a few days later. But it took days, and had me quite worried.
> I mean there's fraud and theft on all levels
you are confusing payment card issuers and processors with banks
I most certainly am not. But there's certainly fraud in those places too. There is all kinds of frauds within banking, from insider trading to cleverly hidden rounding errors being pocketed by software engineers, and everything in between.
Many/most banks are also issuing banks (which means that they issue V/MC cards to their users). And fundamentally credit and debit cards are a source of credit risk and fraud for those banks.
We have many times. We've ruined lives and literally killed people over it, but we just accept this is how money works. We couldn't possibly consider changing The System because The System is perfect, all-knowing and benevolent. Trust in The System!
Also there's a bunch of really annoying and expensive processes for rich people to get their money back after an error, so they don't see any problem.
If only we could store financial data on a globally distributed immutable ledger with strong cryptographic guarantees.
with all the self-custody crypto cards available right now I completely stopped using bank accounts. Can easily pull the data from the ledger and automate payments as I wish
yup, MiCA makign euroepa nstablecoins akin to real money, so stables like monerium can be used just like if you used revolut and a card from revolut
its crazy and its here today
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> In the intervening years, that competition has arrived. The banks do not like it, and would prefer it if it went away.
This is the conclusion of most articles about such topics. The conclusion is that we need less "knuckle-raps". Instead, a crippling sledgehammer blow to both kneecaps followed by a warning that the next will be to the skull (of the company, to be clear) unless the banks entirely capitulate, accept a massive reduction in profits and executive pay, and fully open their entire systems.
HN darling but ... thumbs down. Seemingly no insight. Long read (skipped most). IMHO largely valueless opine and supposition. I think we already know bankers bank, corporations can't innovate, and regulations are abused for protectionism.
I had a funny chat in the 90s with soneone in charge of a bank. The thing was, they wanted me to supply a business plan. I know how to write those but find it mysterious that they want me to write it for all completely unorriginal businesses. If one wants to start a shoe store one should simply investigate the demography and map the varous shoe stores nearby. The bank is in a position to do that cheaply for their entire service area. Innovation would be to put the opportunities in the window display. Their standard plan can have everything they look for. No need to complaint that the guy who hapoens to be good at baking bread forgot something. If the data checks out you can give much larger lones with more interest. If there are many holes in the coverage you sell someone a lone for a franchise. It was a funny chat because everything was impossible, even a bank director should not submit ideas.
The bank isn't so interested in whether it's a good idea to open a shoe store or not, but in whether you as the person asking for lending has the skillset to actually execute on that plan. Asking the person who wants lending to write the plan is the easiest way to check this.
The business plan is not about the business plan.
It's only even half about the business. Instead it is about the businessman making the pitch.
If someone is good at baking bread that suggest they are qualified to to bake bread. Running a bakery is a super set of that skill. The business plan request is a fantastic method to give such a person a chance to show they have the right resources, enough experience, and reasonable expectations and strong commitment.
Well of course. That’s how most gatekeepers act.
Why does every employee in the US need to pay an accountant to file their corporate payroll taxes, when the corporation knows how much they paid and can just use THEIR accountant to report this same information? It would be standard across many employees. And in Europe that’s largely what’s done. But in USA this creates many “bullshit jobs”. The IRS just closed their free file under Trump admin, and even when they had it, you had no way to electronically submit business taxes, and even if you mailed those to the IRS (still allowed) some states have NO WAY for you to file taxes without an accountant!
To open an LLC in NY you must announce it in a specific newspaper they tell you. And that newspaper charges $700. Same thing — they lobby to keep this going.
> Why does every employee in the US need to pay an accountant to file their corporate payroll taxes, when the corporation knows how much they paid and can just use THEIR accountant to report this same information?
How would my employer know how much money my savings, chequing and investment accounts make? I owe taxes on all of those as well as on my income.
How would my employer know what interest I pay on my mortgage, how much I contribute to charity and my other deductible expenses?
> some states have NO WAY for you to file taxes without an accountant
Which ones?
>Why does every employee in the US need to pay an accountant to file their corporate payroll taxes, when the corporation knows how much they paid and can just use THEIR accountant to report this same information?
You don't need an accountant, and employees do not pay "corporate payroll taxes", they usually just pay income tax to the federal government.
And if you think tax liability is based solely on amount of pay received from an employer, then I think you must not have any experience with paying income taxes in the US.
>The IRS just closed their free file under Trump admin
Free Fillable Forms is still available for electronic submissions. What closed was the government provided alternative to guided tax preparation software like TurboTax.
> some states have NO WAY for you to file taxes without an accountant!
I doubt this. Please provide an example.
HN anathema: crypto and blockchain — can and does trivially solve the issues Patrick writes about. You can easily make sure the account has enough money, without knowing whose account it is. Crypto is “buyer beware”. The traditional fintech system is “seller beware”. But crypto is programmable and in theory you could easily make use of arbitration, resolution of disputes, and periodic payouts etc. All without being forced into the bundle of services you don’t control, that banks saddle you with.
Crypto and blockchain by itself does not solve any of these problems. It's merely a payments system that happens to be on a computer natively. There's nothing technical preventing banks from getting together and making Open Banking a well-supported thing like they're supposed to be doing; it's all just code and contracts in the end. It's not that they can't, it's that they won't, and they won't for business and political reasons. Crypto is subject to the same pressures but doesn't have the same regulations to constrain their actions. Crypto's better ability to eg do international payments is not because of any technical reason but simply because they don't have the same regulations and inertia of the traditional banking system. While the traditional banking system has problems with its regulations making things too hard to do, many people prefer it to the easier to screw up wild west of crypto payments. Lots of people like the FDIC making sure their savings aren't wiped out if the bank lies on its balance sheet, or the ability to claw back money transfers if someone breaks into their account. Crypto could certainly provide those services and backstops, but they haven't yet, and based on the prevailing attitude amongst the major participants, it's unlikely they will anytime soon. The only real difference between crypto and banks as a payments system is whether or not you want to start from scratch and build up, or start with the existing morass and tear down. The latter is the safer option which many people prefer when it concerns their money
The idea that I’d need anybody’s permission or a regulation to allow me to give my money to somebody else is the problem.
As an honest person, that makes sense. Unfortunately, the world is filled with people who are not. If I have to give my money to Alice to give it to Bob because Alice is the only person with a way to get it to Bob, I'm trusting Alice to just do that. But Alice is a business woman and is doing this for lots of people. One day, Alice just disappears with everybody's money. All of the people that relied on Alice to get money to Bob just got screwed. So then they make a bunch of rules and regulations so that doesn't happen again.
MTLs, money transmission licenses exist to say you can’t legally handle other people’s money without proving you’re trustworthy, solvent, and compliant with anti-crime laws.
Who's permission do you need to be allowed to accept $10 in cash? I mean there are regulations but that is usually not related directly to the cash payment itself but rather that you know you might need to pay taxes or there is regulation that you can't commit terrorist acts and you know that could be the blocker but then it's not really the cash payment that is needing permission. And again, nothing that Bitcoin or other crypto is solving because you still would have to have the same kind of permission or just not care about the permission but you can do that with cash too.
You still can - make a wire transfer or give them cash. Or what is your actual problem?
My actual problem is that the central bank devalues the money I earned. I'm glad to hear that the financial system works for you, and that you have zero problems making transactions to anybody on the planet. That's not true for a lot of people.
The second law of thermodynamics devalues the money you earned. There's no way you can have $10 that always and forever buys the same things $10 currently does.
Central banks keep its value higher than the alternative, as anyone who doesn't have oppositional defiance disorder would notice from the fact that we haven't had a Great Depression lately. Because it really gets devalued if there's an economic collapse and all the businesses you trade with cease to exist.
Have you ever heard of gold? That didn't continuously lose value. I'm sorry to hear you believe the nonsense modern economists, bankers and politicians tell you.
What is "value" here?
If you value being able to purchase a specific good X, and they stop making it, then you now don't have currency capable of buying it. Doesn't matter what kind of currency it is.
If you're using value in dollar value, that asset has the price behavior it does because we live in a stable economy with central banks, 2% inflation targeting and so on. You haven't seen the alternative because you'd be on the street.
What you want is TIPS bonds.
Anytime I've tried to buy something with crypto, the fees have been an order of magnitude higher than interchange (credit card) fees. And unlike credit cards, the cost is put on me not the merchant.
There one Blockchain is used for memes, but it's actually very efficient one and the fees are very low. Where i live we use to move USDC between accounts very easily.
You can't be sure of anything just because a crypto wallet appears to have a number in it, because the legal system exists, and judges don't care what you think a number means if they think something different.
Mainly this comes up during bankruptcy, but they can also just order you to return stolen funds you've received even if you would prefer not to do that.