Occasionally in YC founder circles a new founder will raise a bunch of money and then ask something like "What's the best way to invest all the money our company just raised?"
The responses are always along the lines of "Your startup is already risky. Don't innovate in areas of your business where the status quo is known to work. Innovate your product + technology, don't be innovative with your company's finances, HR, etc"
That advice always stuck with me. It just makes a lot of sense to do things in the most boring way possible, except where it matters (your competitive advantage <-- that's where you innovate, that's where you set yourself apart)
Running a startup is distracting enough. Doing things non-standard just adds to the list of distractions that you don't need as a founder.
Yeah but after a series of Big Prints we finally managed to make an inflation spike, a run on Silicon Valley Bank, the US President openly contemplating dollar devaluation, "Sell America trade" working for the first time in 50 years, the marginal buyer of treasuries eliminating the last dove on the path to war, and precious metals whipping around like meme stocks. "Park the money in a USD money market at SVB" used to be not just OK, but universally agreed to be obviously OK, which had value of its own. Now it's just OK. Probably. I hope.
Will we see some pivots into bullshit crypto holding companies? Sure, but VC returns are notoriously lottery-ticket distributed and 0 is 0 however you get there. I'd hazard a bet that the number of otherwise-successful companies who die due to this policy rounds to 0, while the probability of an inflationary wrecking ball that wipes out an entire batch of otherwise promising startups in the absence of such a policy is... north of zero.
To be clear, I don't think this is due to a special property of crypto, just the flexibility to get away from USD in case of emergency.
EDIT: maybe 24/7 trading could be an argument. It would be a meme for the ages if a raft of startups survived because they were up hustling and grinding at 2AM when the boats hit the Taiwan Strait.
You’re describing an event that would wipe out the US economy and trying to protect against that with stable coins, or at least that’s the impression I’m getting.
If the US falls apart, your startup will too. No matter how well preserved your cash reserves are.
The US going to war or entering hyperinflation is probably at the bottom of most founders lists of existential worries. Not a risk to mitigate (it’s a risk you need to accept since there’s nothing you can do - worrying about it won’t help)
Also, worth mentioning that no one lost money with SVB’s collapse. One might argue it was an incredibly smart decision for YC to recommend people bank at SVB since if SVB goes under, virtually all LP’s and everyone in the VC community will go under too (too big to fail, so they won’t, or if they do, everyone else fails too — kind of like AWS us-east-1)
No one might have lost their money with the collapse of the banks but with the large amount of new money printed, the value of each dollar will continue to erode.
Inflation and hyper-inflation can wipe out debts with future money that's cheaper more easily in some ways. I forget where I had read or learned more about this in other countries that had experienced it.
Then again, to play devils advocate, doing all the other stuff in a new way might also help your company break out of the cycle that typically impacts startups. It may be that the other things you do apart from your product are what make it successful.
I mean if you have a significant chunk of free cash sitting around there's almost no reason not to put a portion of it in 3-6 month Treasuries or something.
The return won't be much but it's better than letting the cash sit idle and evaporate due to inflation
This comment really shows how far the SV VC culture still is from running profitable businesses with solid fundamentals. No surprise that I am hearing this on the same website where people come to act like hard-done-by factory workers whenever [incredibly bloated and dysfunctional FAANG] lays people off after facing the real-world financial realities.
For the love of God, no. Do not do that. The cycle begins when you take the money. How there are still people here that don’t get this, I don’t understand.
And after a serious beating it's still value at $48 billion.
Put it another way: of all the companies YC funded, both those who succeeded and the countless who failed, only two companies, AirBnB and Doordash, are valued more than Coinbase.
I don't think YC hates cryptocurrencies as much as the typical commenter on HN.
Stablecoins make a lot of sense in countries like Argentina where the national currency is a shitcoin. But YC doesn't fund startups in Argentina. Stablecoins can also be used to pay remote employees but that should probably go through an employer of record so that people aren't paid under the table. This sounds like more crypto for the sake of crypto.
Argentina got there with huge tariffs and excessive spending. Good thing the US would never do crazy stuff like that, right? Also the US government is currently debasing USD to increase exports as well as instituting currency controls. There's lots of reasons to be concerned about relying on USD.
Argentina has debt in foreign denominated bonds though - the US (and UK, Japan, Canada, Australia, NZ, etc.) don't, only issuing bonds in their own currency, which makes a massive difference.
Not to say that Trump isn't wreaking economic havoc and madness, but the USD is resting on a far stronger base than somewhere like Argentina.
On face I don't see why startups would oppose to paying people under the table unless they just have a dogmatic adherence to the law. Like anything, they are likely to do a cost/risk analysis, which could change wildly depending on the context of the remote employee.
Yup. That's it. Because people are realizing crypto isn't worth the effort to support malware authors, money launderers, and North Korea's nuclear program.
And if you didn't know that's what you're supporting with the hype train, well now you do. Those folks all love and greatly benefit from difficult to audit financial instruments.
Axiom's pitch is "Trade memecoins, perpetuals, and earn yield" [1] so presumably they've hired a load of cryptocurrency-loving developers, and are eager to pay them in cryptocurrency.
Of course, given that the grandparent said "If they aren’t a crypto startup" - Axiom clearly doesn't apply.
Despite still not really showing any utility these tech companies want so so so much for cryptocurrency to catch on.
It feels like the entirety of cryptocurrency, outside of being a thing people used to buy drugs, has been an example of Chesterton's Fence, with half of Silicon Valley in denial of this fact.
Might help them win crypto deals. Or expand into shady geographies. Otherwise, I guess having a signal that your founders will donate the interest they’re owed is…something.
SVB was considered the "standard" bank for all startups for decades so it's not surprising that YC would give the same advice. If you run a startup out of a normal bank sometimes you get weird glitches: https://mitchellh.com/writing/my-startup-banking-story
Of course today startups are probably using Mercury/Ramp/whatever.
SVB depositors were mildly interrupted, no doubt, but there's little reason not to exercise extreme moral hazard in banking. OPM will bail you out via FDIC. Theoretically that has a limit but in practice FDIC usually will bail out the full balances even over the nominal limit.
If I had an FDIC account I would basically want a bank that invests my money in the most wildly hazardous ways with the most reckless financial controls to give the max returns and flexibility, then let everyone else bail me out if it went south.
Go back to the SVB failure threads here and observe the freak out before the decision was made to reimburse deposits above FDIC limits. Sometimes you’re lucky, but luck is not effective risk management.
It's quite hilarious that you link to an EA forum to make your point when it's a known fact SBF was from the EA movement and they openly discussed --after the SBF/FTX/Alameda fraud was exposed-- whether scamming people to give part of the money they stole to fund things they thought would make EA participants look as white knight was acceptable or not.
The best example is SBF's guru who bought a 15 million GBP mansion in the UK for the EA movement with stolen funds.
Now he's keeping a very low profile because I know for a fact that up to a few years ago there was still assets being clawed back from the Enron fraud (!). So that mansion could be seized one day from the EA movement.
Let's steal money, let's buy private jets and fancy villas for our parents in tax heavens, let's give some to worthy cause (worthy in their own eyes).
Despicable people this EA movement.
And, no, I'm neither taking lessons nor explanations from what are, in the end, just petty scammers / thieves.
I hope we aren't too close to "territorial currencies" where each feudal lord was authorized (or not forbidden) to mint his own currency, which couldn't be carried over the next feud. Think awarded "miles" by your credit card, or tickets in a games center.
During the Free Banking era of US history (from when Andrew Jackson killed the 2nd National Bank until the Civil War, roughly 1837-1863) essentially every company that could get their state to give them a bank charter (very very poorly regulated) could issue its own paper notes that were treated as currency, with the very poor state regulation alone responsible for ensuring that they didn't print more notes than they had specie to back up.
You'll never guess, but most banks didn't actually have enough specie to back their notes, and banks constantly failed during the Free Banking era. If a bank failed then the notes value went to zero, and so notes always traded at a discount to their face value, and there were even brokers who were paid by local merchants to give them the latest correct discount rates for all the local banks (updating daily), and if a bank note got far enough away from the bank that the local broker didn't know about it, well, then it wouldn't be accepted by a local merchant. So effectively a similar result here in the capitalist, non-aristocratic US for about 15 years.
This is an enormous amount of overhead in actually running an economy, which was why it was ended and we had the National Banking Acts of 1863 and 1864 to try to create a more uniform currency, and the Bureau of Engraving and Printing created in 1862, etc. Because the actual businesses started to demand simpler accounting, and so more financial regulation of the banks.
> You'll never guess, but most banks didn't actually have enough specie to back their notes, and banks constantly failed during the Free Banking era. If a bank failed then the notes value went to zero, and so notes always traded at a discount to their face value, and there were even brokers who were paid by local merchants to give them the latest correct discount rates for all the local banks (updating daily), and if a bank note got far enough away from the bank that the local broker didn't know about it, well, then it wouldn't be accepted by a local merchant.
That sounds like a libertarian paradise. Sign us all up!
Ironically enough though, could feudal currencies actually be better on a blockchain? Think shares in a business. Bitcoin is backed by nothing, but if businesses all trade on Ethereum–style L2s, you could lock in whatever you want. Think: I want 2 tonnes of lumber for my new house build so I will trade whatever for 20000 $HomeDepotLMBR and it entitles me to exactly that amount when I go into the store.
As evidenced by the comments on this post, HN understanding of crypto is typically ten years out of date, so I'm going to post this top level:
- Transferring money across regions with the best 'normie' tools (eg Transferwise/wise.com) is multiple orders of magnitude more expensive than $0.0000015 (tranferring USDC or another GENIUS-compliant stablecoin on Solana).
- You can easily put stablecoins in a Lulo savings account and get 5% interest instead of 0.1% or whatever your bank provides. Yes Lulo has insurance.
- The Genius act regulates stablecoin provision. US-issued stablecoins are backed by government bonds with proof of reserves. USDC and PyUSD are compliant already, USAT exists because USDT isn't compliant.
- There's no offramp fees for PyUSD, and you, random American, have a Solana address in the 'crypto' tab of your Paypal app. 1234.56 in PyUSD means you get 1234.56 in Chase or Wells Fargo or whatever. In future your bank will hold these assets directly without need to off-ramp at all.
If you want to throw your investors money away to outdated percentage point cross border payments systems you're welcome to.
> Transferring money across regions with the best 'normie' tools (eg Transferwise/wise.com) is multiple orders of magnitude more expensive than $0.0000015 (tranferring USDC or another GENIUS-compliant stablecoin on Solana).
I don't see how that's relevant to YC startups. Startups can't legally pay their employees in crypto through transfers, any more than they can write checks out of their bank account or pay their employees in cash. I've paid an overseas employee in BTC before, but we still had to go through a payroll provider and do everything above-board to satisfy IRS requirements.
I'm curious why you can't legally pay in crypto?
I heard a few times about companies paying in crypto to their remote workers. In fact I heard that a US company was paying in BTC withing the US, though I'm not sure I trust this particular story. I also see that Deel accepts USDC, and to my understanding they convert to local currency of the remote worker.
Is that all illegal? Truly want to understand.
And how are you supposed to convert USD to USDC to local currency at par? The exchange fees end up eating any savings you got from not using the normie SWIFT network, and then at tax filing time you have to account for paying / being paid in specie instead of cash.
I edited my comment above to provide answer. Swap whatever stable to PyUSD (negligible) and then send to your Solana address in Paypal. You can also hold crypto in US banks pretty soon.
- ACH fees are pretty small, depends on the payroll provider of course, so USD ACH transfer to Wise is pretty much free
- I bet with whatever way I can convert the stable coin to my local currency (EUR), that it will be more expensive than Wise. Certainly Paypal is really expensive (as in SWIFT transfer would be better)
After ACH, which I’m assuming you got for free as you mentioned, US to Poland for 1000 USD on Wise is still 0.46% which is multiple orders of magnitude more expensive.
This all makes sense... if a YC startup is going to spend the majority of its funding outside the US. I'm having trouble thinking of such a scenario though. I'd expect YC money to be spent on rent, founder salaries, and API calls.
I don't know why I'd trust crypto companies with my company's money given the general lack of regulation; outrageous history of massive fraud, scams, security breaches and simply insiders running away with money; short history of these companies; lack of trusted deposit insurance; lack of reversibility; suspicious claims of guaranteed high "risk free" rates of return; and frankly, the general seediness of seemingly everyone involved.
I mean, asking for $500 in gold every paycheck would be kinda cool, or getting gold coinage each pay cycle on a rolling basis, as many coins as your repeated $500 contributions buy.
It'd be friction against spending, a little bit of investing, in the case of gold, but friction against spending with crypto only makes sense if you don't lose a lot on moving it into a real bank account.
Why? Because the US stable coins are an abstraction on top of US treasuries. It's effectively trading in the US debt market, not trading in crypto-hype.
The Fed is interested in converting the debt to another medium, for obvious reasons. Stablecoin looks to be the leader, since a number of the new administration have talked about it in the last decade (re: Scott Besset stablecoin speech).
I can understand why some companies want their runway in a currency that may go up during a transition (a more favorable exchange rate). There's little lossage in the exchange of USDT/USDC in the short term. Seems like a hedge strategy.
The why stands. If the Fed got involved in transitioning the currency, which seems MORE likely under this administration (because of the grift and corruption), then they will be negotiating with the stable coin providers and the grift will follow the normal trajectory to the moon or whatever. The arbitrary "not until some independent shows the paperwork" will never be on the table.
Independent audits aren't arbitrary. They're the standard by which you can tell whether an organization is lying about their finances. Double entry accounting and receipts makes it pretty difficult to fake especially when the claim is as simple as "don't worry, we hold the backing value in treasuries." Of course, the independent part has to be truly independent and not paid for by the audited. But they refuse independent audits.
> I don't take "trust me" from a crypto bro as proof of backing funds
This is a good distillation of the inherent issue going forward with crypto. The people in tech I trust _least_ (cryptobros) are selling in a service that I require the _highest_ level of trust (finance). It's a very bad sales pitch.
You don't buy stablecoins because you trust them. You buy them because a greater idiot will. For that reason, I wouldn't be particularly bothered about getting them instead of dollars, though I'd try not to hold on to them terribly long.
Between this and Canada being dropped as an investable country shortly after the recent US/Canada fracas, I'm starting to wonder about YC's current political affiliations. Also, if you want to put your tinfoil hat on, Michael Seibel and Dalton Caldwell were publicly anti-Trump, and they both left months after the Trump admin took over, a very paranoid take is that the big shot VCs tied to YC made a push to "clean house" or "toe the line" and they were either gently pushed out or decided to leave because they didn't like the new vibes.
> Michael Seibel and Dalton Caldwell were publicly anti-Trump
Neither of these were "publicly anti-Trump" as much as Garry Tan has been.
Actually, where'd you even get that from? I cannot with my life imagine that Dalton would publicly post about politics. I've googled around a bit and found nothing either.
Michael specifically mentions in an older video with Dalton brainstorming things they could do about Trump. I don't recall ever seeing a YC video where Garry leaks any political affiliations, though I don't follow him on social media.
I don't recall the specific Dalton + Michael video, and it's not important enough for me to dig up, particularly if Garry is politically outspoken on social media. I'd prefer to believe YC is still a neutral player, but the amount of ring kissing from the big valley VCs makes suspicion rational.
Not endorsing conspiracy theories but one of the YC guys is an investor in flock, which is positioned to benefit from some of the recent political policies.
This is intersting.
Occasionally in YC founder circles a new founder will raise a bunch of money and then ask something like "What's the best way to invest all the money our company just raised?"
The responses are always along the lines of "Your startup is already risky. Don't innovate in areas of your business where the status quo is known to work. Innovate your product + technology, don't be innovative with your company's finances, HR, etc"
That advice always stuck with me. It just makes a lot of sense to do things in the most boring way possible, except where it matters (your competitive advantage <-- that's where you innovate, that's where you set yourself apart)
Running a startup is distracting enough. Doing things non-standard just adds to the list of distractions that you don't need as a founder.
Yeah but after a series of Big Prints we finally managed to make an inflation spike, a run on Silicon Valley Bank, the US President openly contemplating dollar devaluation, "Sell America trade" working for the first time in 50 years, the marginal buyer of treasuries eliminating the last dove on the path to war, and precious metals whipping around like meme stocks. "Park the money in a USD money market at SVB" used to be not just OK, but universally agreed to be obviously OK, which had value of its own. Now it's just OK. Probably. I hope.
Will we see some pivots into bullshit crypto holding companies? Sure, but VC returns are notoriously lottery-ticket distributed and 0 is 0 however you get there. I'd hazard a bet that the number of otherwise-successful companies who die due to this policy rounds to 0, while the probability of an inflationary wrecking ball that wipes out an entire batch of otherwise promising startups in the absence of such a policy is... north of zero.
To be clear, I don't think this is due to a special property of crypto, just the flexibility to get away from USD in case of emergency.
EDIT: maybe 24/7 trading could be an argument. It would be a meme for the ages if a raft of startups survived because they were up hustling and grinding at 2AM when the boats hit the Taiwan Strait.
You’re describing an event that would wipe out the US economy and trying to protect against that with stable coins, or at least that’s the impression I’m getting.
If the US falls apart, your startup will too. No matter how well preserved your cash reserves are.
The US going to war or entering hyperinflation is probably at the bottom of most founders lists of existential worries. Not a risk to mitigate (it’s a risk you need to accept since there’s nothing you can do - worrying about it won’t help)
Also, worth mentioning that no one lost money with SVB’s collapse. One might argue it was an incredibly smart decision for YC to recommend people bank at SVB since if SVB goes under, virtually all LP’s and everyone in the VC community will go under too (too big to fail, so they won’t, or if they do, everyone else fails too — kind of like AWS us-east-1)
No one might have lost their money with the collapse of the banks but with the large amount of new money printed, the value of each dollar will continue to erode.
Inflation and hyper-inflation can wipe out debts with future money that's cheaper more easily in some ways. I forget where I had read or learned more about this in other countries that had experienced it.
Then again, to play devils advocate, doing all the other stuff in a new way might also help your company break out of the cycle that typically impacts startups. It may be that the other things you do apart from your product are what make it successful.
Figuring out a better way to ~~invest~~ speculate with your company's balance sheet is seriously unlikely to improve the trajectory of your company.
I mean if you have a significant chunk of free cash sitting around there's almost no reason not to put a portion of it in 3-6 month Treasuries or something.
The return won't be much but it's better than letting the cash sit idle and evaporate due to inflation
This comment really shows how far the SV VC culture still is from running profitable businesses with solid fundamentals. No surprise that I am hearing this on the same website where people come to act like hard-done-by factory workers whenever [incredibly bloated and dysfunctional FAANG] lays people off after facing the real-world financial realities.
For the love of God, no. Do not do that. The cycle begins when you take the money. How there are still people here that don’t get this, I don’t understand.
Not once in mankind's history has any great product or feat been enhanced or achieved through the use of timesheets.
Don't get bogged down with that stuff.
You've taken VC money at that point. Hate to say it, but doing that means you're voluntarily going into the cycle with no intent to break it.
Sounds like a camouflaged IQ test for the founders...
Or perhaps Y Combinator is great at funding startups, but incredibly bad with financial decision making.
In which case it is an IQ test for Y Combinator, which they have failed.
As with all things cryptocurrency, the goal is to bypass financial regulations and external scrutiny.
One of the biggest YC success story is Coinbase. It has literally got "coin" in its name.
It also trades under the ticker "COIN": https://finance.yahoo.com/quote/COIN/
And after a serious beating it's still value at $48 billion.
Put it another way: of all the companies YC funded, both those who succeeded and the countless who failed, only two companies, AirBnB and Doordash, are valued more than Coinbase.
I don't think YC hates cryptocurrencies as much as the typical commenter on HN.
Exploring the simplest version of this - I wonder if stablecoins are cheaper / easier to financially to transfer that much money.
Indirectly it might provide some more public visibility initally anyways.
Stablecoins make a lot of sense in countries like Argentina where the national currency is a shitcoin. But YC doesn't fund startups in Argentina. Stablecoins can also be used to pay remote employees but that should probably go through an employer of record so that people aren't paid under the table. This sounds like more crypto for the sake of crypto.
Argentina got there with huge tariffs and excessive spending. Good thing the US would never do crazy stuff like that, right? Also the US government is currently debasing USD to increase exports as well as instituting currency controls. There's lots of reasons to be concerned about relying on USD.
Argentina has debt in foreign denominated bonds though - the US (and UK, Japan, Canada, Australia, NZ, etc.) don't, only issuing bonds in their own currency, which makes a massive difference.
Not to say that Trump isn't wreaking economic havoc and madness, but the USD is resting on a far stronger base than somewhere like Argentina.
but stablecoins are usually pegged to the dollar, right?
On face I don't see why startups would oppose to paying people under the table unless they just have a dogmatic adherence to the law. Like anything, they are likely to do a cost/risk analysis, which could change wildly depending on the context of the remote employee.
If they aren’t a crypto startup where it’s normal to pay others in stable coins, what is the benefit?
Hyping crypto and "stable" coins
Yup. That's it. Because people are realizing crypto isn't worth the effort to support malware authors, money launderers, and North Korea's nuclear program.
And if you didn't know that's what you're supporting with the hype train, well now you do. Those folks all love and greatly benefit from difficult to audit financial instruments.
Axium (YC W25) hit $100M revenue in 4-5 months, making it the fastest YC company to that milestone. Startups like that are important to YC.
How do they use stablecoins?
Axiom's pitch is "Trade memecoins, perpetuals, and earn yield" [1] so presumably they've hired a load of cryptocurrency-loving developers, and are eager to pay them in cryptocurrency.
Of course, given that the grandparent said "If they aren’t a crypto startup" - Axiom clearly doesn't apply.
[1] https://www.ycombinator.com/companies/axiom
Circular funding / money flows
YC -> Circle -> Coinbase -> YC
Ohhhh... So that's why it's called Y combinator.
Despite still not really showing any utility these tech companies want so so so much for cryptocurrency to catch on.
It feels like the entirety of cryptocurrency, outside of being a thing people used to buy drugs, has been an example of Chesterton's Fence, with half of Silicon Valley in denial of this fact.
Might help them win crypto deals. Or expand into shady geographies. Otherwise, I guess having a signal that your founders will donate the interest they’re owed is…something.
Indisputable evidence that YC loves smelling its own farts. Pure absurdity. America truly is reaping what it’s sowing.
YC's previous recommendation was to use Silicon Valley Bank. That ended well.
What's the context here? When, where and for what did they recommend SVB?
(FWIW, it did end well, as going with a relatively large federally insured bank meant that no one lost any money during the crash)
SVB was considered the "standard" bank for all startups for decades so it's not surprising that YC would give the same advice. If you run a startup out of a normal bank sometimes you get weird glitches: https://mitchellh.com/writing/my-startup-banking-story
Of course today startups are probably using Mercury/Ramp/whatever.
I don't see any weird glitches there
chase did what they were asked for years
up to the point they were told there had fraud going on, at which point the walls went up
which is entirely as to be expected
SVB depositors were mildly interrupted, no doubt, but there's little reason not to exercise extreme moral hazard in banking. OPM will bail you out via FDIC. Theoretically that has a limit but in practice FDIC usually will bail out the full balances even over the nominal limit.
If I had an FDIC account I would basically want a bank that invests my money in the most wildly hazardous ways with the most reckless financial controls to give the max returns and flexibility, then let everyone else bail me out if it went south.
Go back to the SVB failure threads here and observe the freak out before the decision was made to reimburse deposits above FDIC limits. Sometimes you’re lucky, but luck is not effective risk management.
> OPM will bail you out via FDIC.
I'm waiting for the demands for a bailout when the next big stablecoin goes bust. Especially if it's Trump's.[1]
[1] https://finance.yahoo.com/news/trump-usd1-stablecoin-hits-5b...
Remember when YC funded (and boosted reach of) ~50 crypto scamlike co's during the heyday of the craze? Like the Stablegains scam fiasco:
https://news.ycombinator.com/item?id=31686140
https://news.ycombinator.com/item?id=31431224
https://news.ycombinator.com/item?id=31461634
50 crypto scams? Why do you link the same one thrice, then?
https://forum.effectivealtruism.org/posts/5mghcxCabxuaK4WTs/...
It's quite hilarious that you link to an EA forum to make your point when it's a known fact SBF was from the EA movement and they openly discussed --after the SBF/FTX/Alameda fraud was exposed-- whether scamming people to give part of the money they stole to fund things they thought would make EA participants look as white knight was acceptable or not.
The best example is SBF's guru who bought a 15 million GBP mansion in the UK for the EA movement with stolen funds.
Now he's keeping a very low profile because I know for a fact that up to a few years ago there was still assets being clawed back from the Enron fraud (!). So that mansion could be seized one day from the EA movement.
Let's steal money, let's buy private jets and fancy villas for our parents in tax heavens, let's give some to worthy cause (worthy in their own eyes).
Despicable people this EA movement.
And, no, I'm neither taking lessons nor explanations from what are, in the end, just petty scammers / thieves.
I hope we aren't too close to "territorial currencies" where each feudal lord was authorized (or not forbidden) to mint his own currency, which couldn't be carried over the next feud. Think awarded "miles" by your credit card, or tickets in a games center.
https://ndl.ethernet.edu.et/bitstream/123456789/41452/1/112....
During the Free Banking era of US history (from when Andrew Jackson killed the 2nd National Bank until the Civil War, roughly 1837-1863) essentially every company that could get their state to give them a bank charter (very very poorly regulated) could issue its own paper notes that were treated as currency, with the very poor state regulation alone responsible for ensuring that they didn't print more notes than they had specie to back up.
You'll never guess, but most banks didn't actually have enough specie to back their notes, and banks constantly failed during the Free Banking era. If a bank failed then the notes value went to zero, and so notes always traded at a discount to their face value, and there were even brokers who were paid by local merchants to give them the latest correct discount rates for all the local banks (updating daily), and if a bank note got far enough away from the bank that the local broker didn't know about it, well, then it wouldn't be accepted by a local merchant. So effectively a similar result here in the capitalist, non-aristocratic US for about 15 years.
This is an enormous amount of overhead in actually running an economy, which was why it was ended and we had the National Banking Acts of 1863 and 1864 to try to create a more uniform currency, and the Bureau of Engraving and Printing created in 1862, etc. Because the actual businesses started to demand simpler accounting, and so more financial regulation of the banks.
> You'll never guess, but most banks didn't actually have enough specie to back their notes, and banks constantly failed during the Free Banking era. If a bank failed then the notes value went to zero, and so notes always traded at a discount to their face value, and there were even brokers who were paid by local merchants to give them the latest correct discount rates for all the local banks (updating daily), and if a bank note got far enough away from the bank that the local broker didn't know about it, well, then it wouldn't be accepted by a local merchant.
That sounds like a libertarian paradise. Sign us all up!
I don't see how this relates to that.
Ironically enough though, could feudal currencies actually be better on a blockchain? Think shares in a business. Bitcoin is backed by nothing, but if businesses all trade on Ethereum–style L2s, you could lock in whatever you want. Think: I want 2 tonnes of lumber for my new house build so I will trade whatever for 20000 $HomeDepotLMBR and it entitles me to exactly that amount when I go into the store.
As evidenced by the comments on this post, HN understanding of crypto is typically ten years out of date, so I'm going to post this top level:
- Transferring money across regions with the best 'normie' tools (eg Transferwise/wise.com) is multiple orders of magnitude more expensive than $0.0000015 (tranferring USDC or another GENIUS-compliant stablecoin on Solana).
- You can easily put stablecoins in a Lulo savings account and get 5% interest instead of 0.1% or whatever your bank provides. Yes Lulo has insurance.
- The Genius act regulates stablecoin provision. US-issued stablecoins are backed by government bonds with proof of reserves. USDC and PyUSD are compliant already, USAT exists because USDT isn't compliant.
- There's no offramp fees for PyUSD, and you, random American, have a Solana address in the 'crypto' tab of your Paypal app. 1234.56 in PyUSD means you get 1234.56 in Chase or Wells Fargo or whatever. In future your bank will hold these assets directly without need to off-ramp at all.
If you want to throw your investors money away to outdated percentage point cross border payments systems you're welcome to.
> Transferring money across regions with the best 'normie' tools (eg Transferwise/wise.com) is multiple orders of magnitude more expensive than $0.0000015 (tranferring USDC or another GENIUS-compliant stablecoin on Solana).
I don't see how that's relevant to YC startups. Startups can't legally pay their employees in crypto through transfers, any more than they can write checks out of their bank account or pay their employees in cash. I've paid an overseas employee in BTC before, but we still had to go through a payroll provider and do everything above-board to satisfy IRS requirements.
I'm curious why you can't legally pay in crypto? I heard a few times about companies paying in crypto to their remote workers. In fact I heard that a US company was paying in BTC withing the US, though I'm not sure I trust this particular story. I also see that Deel accepts USDC, and to my understanding they convert to local currency of the remote worker. Is that all illegal? Truly want to understand.
And how are you supposed to convert USD to USDC to local currency at par? The exchange fees end up eating any savings you got from not using the normie SWIFT network, and then at tax filing time you have to account for paying / being paid in specie instead of cash.
- USDC to local currency at par
I edited my comment above to provide answer. Swap whatever stable to PyUSD (negligible) and then send to your Solana address in Paypal. You can also hold crypto in US banks pretty soon.
- ACH fees are pretty small, depends on the payroll provider of course, so USD ACH transfer to Wise is pretty much free
- I bet with whatever way I can convert the stable coin to my local currency (EUR), that it will be more expensive than Wise. Certainly Paypal is really expensive (as in SWIFT transfer would be better)
After ACH, which I’m assuming you got for free as you mentioned, US to Poland for 1000 USD on Wise is still 0.46% which is multiple orders of magnitude more expensive.
This all makes sense... if a YC startup is going to spend the majority of its funding outside the US. I'm having trouble thinking of such a scenario though. I'd expect YC money to be spent on rent, founder salaries, and API calls.
I don't know why I'd trust crypto companies with my company's money given the general lack of regulation; outrageous history of massive fraud, scams, security breaches and simply insiders running away with money; short history of these companies; lack of trusted deposit insurance; lack of reversibility; suspicious claims of guaranteed high "risk free" rates of return; and frankly, the general seediness of seemingly everyone involved.
I mean, for goodness sake, "normie"? Come on.
The post you are responding to discusses Stablecoin regulation multiple times.
Why not in gold while we're at it?
Both are equally stupid, and you have to exchange them to buy most of the things you might need.
> Why not in gold while we're at it?
Crypto more hype-able
YC connected people aren't as invested into gold as they are crypto.
Why not a gold backed stable coin like PAXG?
I mean, asking for $500 in gold every paycheck would be kinda cool, or getting gold coinage each pay cycle on a rolling basis, as many coins as your repeated $500 contributions buy.
It'd be friction against spending, a little bit of investing, in the case of gold, but friction against spending with crypto only makes sense if you don't lose a lot on moving it into a real bank account.
You can do this, today, if you want, via an IRA or some 401(k)s.
Yeah but my 401(k) tax statement paperwork doesn't make me feel like a pirate.
Guess they want cryptobros, not gold bugs.
Why? Because the US stable coins are an abstraction on top of US treasuries. It's effectively trading in the US debt market, not trading in crypto-hype.
The Fed is interested in converting the debt to another medium, for obvious reasons. Stablecoin looks to be the leader, since a number of the new administration have talked about it in the last decade (re: Scott Besset stablecoin speech).
I can understand why some companies want their runway in a currency that may go up during a transition (a more favorable exchange rate). There's little lossage in the exchange of USDT/USDC in the short term. Seems like a hedge strategy.
> ... US stable coins are an abstraction on top of US treasuries...
Nope. Not until these companies allow an independent external audit. I don't take "trust me" from a crypto bro as proof of backing funds.
Oh, and the current administration is clearly corrupt, so this administration wanting to convert the US to bozo bucks isn't one for the plus column.
The why stands. If the Fed got involved in transitioning the currency, which seems MORE likely under this administration (because of the grift and corruption), then they will be negotiating with the stable coin providers and the grift will follow the normal trajectory to the moon or whatever. The arbitrary "not until some independent shows the paperwork" will never be on the table.
Independent audits aren't arbitrary. They're the standard by which you can tell whether an organization is lying about their finances. Double entry accounting and receipts makes it pretty difficult to fake especially when the claim is as simple as "don't worry, we hold the backing value in treasuries." Of course, the independent part has to be truly independent and not paid for by the audited. But they refuse independent audits.
> I don't take "trust me" from a crypto bro as proof of backing funds
This is a good distillation of the inherent issue going forward with crypto. The people in tech I trust _least_ (cryptobros) are selling in a service that I require the _highest_ level of trust (finance). It's a very bad sales pitch.
You don't buy stablecoins because you trust them. You buy them because a greater idiot will. For that reason, I wouldn't be particularly bothered about getting them instead of dollars, though I'd try not to hold on to them terribly long.
Between this and Canada being dropped as an investable country shortly after the recent US/Canada fracas, I'm starting to wonder about YC's current political affiliations. Also, if you want to put your tinfoil hat on, Michael Seibel and Dalton Caldwell were publicly anti-Trump, and they both left months after the Trump admin took over, a very paranoid take is that the big shot VCs tied to YC made a push to "clean house" or "toe the line" and they were either gently pushed out or decided to leave because they didn't like the new vibes.
> Michael Seibel and Dalton Caldwell were publicly anti-Trump
Neither of these were "publicly anti-Trump" as much as Garry Tan has been.
Actually, where'd you even get that from? I cannot with my life imagine that Dalton would publicly post about politics. I've googled around a bit and found nothing either.
Michael specifically mentions in an older video with Dalton brainstorming things they could do about Trump. I don't recall ever seeing a YC video where Garry leaks any political affiliations, though I don't follow him on social media.
Which video was that? Garry has been an outspoken Trump-critic and moderate Democrat on Twitter.
Either way, my point is it's an extreme stretch to believe their departure, Trump, and crypto stablecoins are somehow related.
I don't recall the specific Dalton + Michael video, and it's not important enough for me to dig up, particularly if Garry is politically outspoken on social media. I'd prefer to believe YC is still a neutral player, but the amount of ring kissing from the big valley VCs makes suspicion rational.
Not endorsing conspiracy theories but one of the YC guys is an investor in flock, which is positioned to benefit from some of the recent political policies.
That's a very misleading way to say that Flock is a YC company [0]!
[0] https://www.ycombinator.com/companies/flock-safety