What are the frictions involved in liquidation (how long, any other issues)?
Basically, would it be feasible for me just to have all but a few grand in my checking account, and then the rest in GLO for easy access?
So right now (given that GLO isnât currently broadly accepted by merchants), what EAs should do is.
Have the money they need to have available within a few days in a normal checking account.
Have the rest of your money you want readily available in GLO.
Have the rest of your money in your normal savings profile.
And if EAs do this, 2% of our âchecking accountsâ, probably 10s of millions of dollars collectively, goes to the poorest people in the world. Even in its current iteration, so much good can happen if people just get on board!
Thanks! The goal is to have a situation where liquidating (i.e. redeeming) is as fast as making a crypto transaction, and can be done at any time with any amount.
It might be the case that in the beginning itâs a little less efficient than this. Weâll prioritise getting the token out in the world first and then move towards that level of service.
Of course, eventually weâll work towards the situation where you wonât need to liquidate your GLO to use it as money, either because
Your GLO balance is linked to a card that automatically converts to USD when you pay
Merchants accept your GLO directly
But youâre right. In the meantime, for a supporter to maximally advance Global Income Coin, theyâd keep an as large amount as practically possible in GLO, try to make their purchases in GLO as much as possible (because this is what incentivises merchants to accept GLO), and keep a USD balance for making purchases that canât be made with GLO yet.
I guess the limiting factor would be the time delay between money as GLO and money as cash. The faster that transition can happen, the more GLO can function as a pseudo-checking account.
Like as an EA, it might make sense to put savings in something like an index fund because it allows for greater yields that you could potentially donate or otherwise deploy. This savings yield would probably be like 7-8%, but would be harder to liquidate, so you wouldnât want to 6 put all your money in it.
But a checking account has basically 0% interest per annum. GLO is basically 2% per annum (to Givedirectly). So even with the current limitations (i.e. Limited ability to spend with GLO), it could still function as an intermediate checking account. So, if I want to have 20k somewhat easily available and 4k of it readily available, Iâd have 4k in my checking account, 16k in GLO. That 16k would be accessible as cash within a few days. Is my analysis correct?
Thatâs right! In the early phases, how hard it is to change GLO to fiat will be somewhat out of our hands, because at some point youâll be touching either ACH or Fedwire. But again, the long-term vision is to build up the infrastructure, and the network of participating merchants, to make this as easy as possible.
Considering that the scale weâre talking about probably involves reaching out to non-crypto people, I feel like my question isnât too basic given that premise:
How fast/âcheap is âmaking a crypto transactionâ currently? Iâve heard bad things about how expensive it is but have no idea if thatâs actually true.
Iâm no expert on Cardano or Solana, but I think both offer considerably faster/âcheaper transactions than we came to expect in cryptoâs earlier days. Hope this helps đ
P.S. one of my personal dreams is to create a dashboard of GLO usage that will make this info easier to find than it currently is. When I researched this a bit I found a bunch of stuff from explicit boosters that had a very sales-y tone but no actual data, and then a bunch of pessimistic stuff from naysayers that also had, you guessed it, no data. Blargh
So this is one of those questions thatâs good precisely because itâs deceptively difficult to answer. Here are some possibilities.
If the car merchant accepts GLO, then it should be basically instantaneous. Medium-run, this is our goal.
If you need to convert to USD first, you will go through a crypto exchange that supports GLO.
Just as a reference point, Coinbase says that selling digital tokens through PayPal will be instantaneous but depositing money into a bank will take 3-5 days. I think other exchanges will be similar, but Coinbasesâs is just what I found online right now.
I asked our CTO about this and he suggested that ideally, someone would build the following GLO-compatible businesses:
(1) a super simple business that allows you as an individual consumer to buy GLO and sell it back to $whateveryourcurrencyis$ in $whateveryourcountryis$ ==> this allows this business to buy GLO from us, without us needing to maintain this consumer relationship
a more elaborate bank-like business that uses GLO as the money layer. They could issue a credit or debit card for consumers in whatever region theyâre active in. This again abstracts the individual relationship away and creates a better experience for a wider set of people using GLO
But these ideas are hypotheticals right now. (Weâve also made a note to flesh these ideas out into a ârequest for startupsâ đ)
As you say elsewhere, when we launch, we wonât be expecting folks to put money that they actually need to spend into GLO, because in our early phases, spending GLO on essentials will be harder than spending fiat (re: potentially impossible) .
So, bottom line: it depends on whether youâre spending at a âparticipating merchantâ or not, and at what point in the development of the GLO ecosystem weâre at.
It does⊠Creating the mechanisms to eliminate friction on the user end is likely to be key to enabling your early supporters to maximize the degree to which they can help the project. I would love to have nothing but a hundred or so bucks in my checking account and the rest of my easily available money in GLO,but then I would need to know that I could immediately redeem. Have you thought about doing something with Zelle to facilitate immediate redemption?
FTX and Binance have credit cards that could let you hold GLO and convert it in USD at the moment you buy something (like a car). If GLO getâs listed on those platforms you should be able to pay with GLO instantly using a mastercard or similar from those platforms.
You could just invest in 3m Treasury bills directly, or invest in a conventional fund that buys bills, (or indeed whatever other investments you thought were most appropriate given your circumstances) and then donate the interest to charity.
Yes⊠if you have $3m lying around which you donât need at the moment.
If you buy $3m GLO, you generate the same amount of interest for charity. But you also receive $3m worth of GLO which you can then go and use in the world as money.
As long as the money stays in the form of GLO, it keeps on generating funds for GiveDirectly because we keep on earning yield with the underlying USD.
With your idea, only money thatâs not currently needed can be put to charitable use. With GLO, money thatâs being actively used (e.g. whatâs on checking accounts) can be used as well.
Put in a different way. Imagine every dollar bill had an imaginary button that you could press to toggle on and off. Turned on, the dollar bill donates $0.02/âyear to GiveDirectly. Other than that, nothing changes, you can still use the dollar bill as normal. Thatâs the idea.
This of course is contingent on us working to make GLO an accepted currency, or to at least have payment rails (e.g. credit cards, Stripe, PayPal) support it. Thatâs indeed what weâll do. Not unrealistic, as said payment rails already support cryptocurrencies (most notably USDC, a stablecoin weâll directly compete with and has pretty much the same properties as GLO).
But even before we make it an accepted means of payment, GLO can already start competing with todayâs $150b stablecoin market. For a sense of scale, if we capture 7% of that, assuming 2% yield, weâd generate $215m annually. Thatâs roughly the amount of cash distributed by GiveDirectly over 2020.
Really great project⊠Iâm so stoked!
What are the frictions involved in liquidation (how long, any other issues)?
Basically, would it be feasible for me just to have all but a few grand in my checking account, and then the rest in GLO for easy access?
So right now (given that GLO isnât currently broadly accepted by merchants), what EAs should do is.
Have the money they need to have available within a few days in a normal checking account.
Have the rest of your money you want readily available in GLO.
Have the rest of your money in your normal savings profile.
And if EAs do this, 2% of our âchecking accountsâ, probably 10s of millions of dollars collectively, goes to the poorest people in the world. Even in its current iteration, so much good can happen if people just get on board!
Thanks! The goal is to have a situation where liquidating (i.e. redeeming) is as fast as making a crypto transaction, and can be done at any time with any amount.
It might be the case that in the beginning itâs a little less efficient than this. Weâll prioritise getting the token out in the world first and then move towards that level of service.
Of course, eventually weâll work towards the situation where you wonât need to liquidate your GLO to use it as money, either because
Your GLO balance is linked to a card that automatically converts to USD when you pay
Merchants accept your GLO directly
But youâre right. In the meantime, for a supporter to maximally advance Global Income Coin, theyâd keep an as large amount as practically possible in GLO, try to make their purchases in GLO as much as possible (because this is what incentivises merchants to accept GLO), and keep a USD balance for making purchases that canât be made with GLO yet.
I guess the limiting factor would be the time delay between money as GLO and money as cash. The faster that transition can happen, the more GLO can function as a pseudo-checking account.
Like as an EA, it might make sense to put savings in something like an index fund because it allows for greater yields that you could potentially donate or otherwise deploy. This savings yield would probably be like 7-8%, but would be harder to liquidate, so you wouldnât want to 6 put all your money in it.
But a checking account has basically 0% interest per annum. GLO is basically 2% per annum (to Givedirectly). So even with the current limitations (i.e. Limited ability to spend with GLO), it could still function as an intermediate checking account. So, if I want to have 20k somewhat easily available and 4k of it readily available, Iâd have 4k in my checking account, 16k in GLO. That 16k would be accessible as cash within a few days. Is my analysis correct?
Thatâs right! In the early phases, how hard it is to change GLO to fiat will be somewhat out of our hands, because at some point youâll be touching either ACH or Fedwire. But again, the long-term vision is to build up the infrastructure, and the network of participating merchants, to make this as easy as possible.
Considering that the scale weâre talking about probably involves reaching out to non-crypto people, I feel like my question isnât too basic given that premise:
How fast/âcheap is âmaking a crypto transactionâ currently? Iâve heard bad things about how expensive it is but have no idea if thatâs actually true.
đ
in general, it depends on which crypto network youâre using.
GLO will deploy on Polygon, where transaction fees should be 5 cents maximum (in practice usually less than 1 cent per transaction), and we expect the network to handle about 7,000 transactions per second.
Is a little more expensive (on both fronts) in Ethereum (but that should change soon), and a transaction on the bitcoin lightning network should also be much faster than bitcoin used to be.
Iâm no expert on Cardano or Solana, but I think both offer considerably faster/âcheaper transactions than we came to expect in cryptoâs earlier days. Hope this helps đ
P.S. one of my personal dreams is to create a dashboard of GLO usage that will make this info easier to find than it currently is. When I researched this a bit I found a bunch of stuff from explicit boosters that had a very sales-y tone but no actual data, and then a bunch of pessimistic stuff from naysayers that also had, you guessed it, no data. Blargh
EDIT: bitcoin link fixed
So, if I have 20k in GLO, and I want cash to buy a car, how long before that 20k in GLO is $20K USD?
So this is one of those questions thatâs good precisely because itâs deceptively difficult to answer. Here are some possibilities.
If the car merchant accepts GLO, then it should be basically instantaneous. Medium-run, this is our goal.
If you need to convert to USD first, you will go through a crypto exchange that supports GLO.
Just as a reference point, Coinbase says that selling digital tokens through PayPal will be instantaneous but depositing money into a bank will take 3-5 days. I think other exchanges will be similar, but Coinbasesâs is just what I found online right now.
I asked our CTO about this and he suggested that ideally, someone would build the following GLO-compatible businesses:
(1) a super simple business that allows you as an individual consumer to buy GLO and sell it back to $whateveryourcurrencyis$ in $whateveryourcountryis$ ==> this allows this business to buy GLO from us, without us needing to maintain this consumer relationship
a more elaborate bank-like business that uses GLO as the money layer. They could issue a credit or debit card for consumers in whatever region theyâre active in. This again abstracts the individual relationship away and creates a better experience for a wider set of people using GLO
But these ideas are hypotheticals right now. (Weâve also made a note to flesh these ideas out into a ârequest for startupsâ đ)
As you say elsewhere, when we launch, we wonât be expecting folks to put money that they actually need to spend into GLO, because in our early phases, spending GLO on essentials will be harder than spending fiat (re: potentially impossible) .
So, bottom line: it depends on whether youâre spending at a âparticipating merchantâ or not, and at what point in the development of the GLO ecosystem weâre at.
Hope this helps!
It does⊠Creating the mechanisms to eliminate friction on the user end is likely to be key to enabling your early supporters to maximize the degree to which they can help the project. I would love to have nothing but a hundred or so bucks in my checking account and the rest of my easily available money in GLO,but then I would need to know that I could immediately redeem. Have you thought about doing something with Zelle to facilitate immediate redemption?
Yes, weâll definitely be looking into partnering with digital payment networks.
FTX and Binance have credit cards that could let you hold GLO and convert it in USD at the moment you buy something (like a car). If GLO getâs listed on those platforms you should be able to pay with GLO instantly using a mastercard or similar from those platforms.
You could just invest in 3m Treasury bills directly, or invest in a conventional fund that buys bills, (or indeed whatever other investments you thought were most appropriate given your circumstances) and then donate the interest to charity.
Yes⊠if you have $3m lying around which you donât need at the moment.
If you buy $3m GLO, you generate the same amount of interest for charity. But you also receive $3m worth of GLO which you can then go and use in the world as money.
As long as the money stays in the form of GLO, it keeps on generating funds for GiveDirectly because we keep on earning yield with the underlying USD.
With your idea, only money thatâs not currently needed can be put to charitable use. With GLO, money thatâs being actively used (e.g. whatâs on checking accounts) can be used as well.
Put in a different way. Imagine every dollar bill had an imaginary button that you could press to toggle on and off. Turned on, the dollar bill donates $0.02/âyear to GiveDirectly. Other than that, nothing changes, you can still use the dollar bill as normal. Thatâs the idea.
This of course is contingent on us working to make GLO an accepted currency, or to at least have payment rails (e.g. credit cards, Stripe, PayPal) support it. Thatâs indeed what weâll do. Not unrealistic, as said payment rails already support cryptocurrencies (most notably USDC, a stablecoin weâll directly compete with and has pretty much the same properties as GLO).
But even before we make it an accepted means of payment, GLO can already start competing with todayâs $150b stablecoin market. For a sense of scale, if we capture 7% of that, assuming 2% yield, weâd generate $215m annually. Thatâs roughly the amount of cash distributed by GiveDirectly over 2020.
Edit: this comment was in the wrong place, sryânow itâs here