> Every dollar that crosses a payments platform has a non-zero chance of creating some combination of legal, regulatory and customer-service costs. Frictionless transactions are as real world as their physics counterpart.
Yes, but pretty much all of those costs are a factor of the originating individual transactions. In reality net settlement is just one additional transaction where things can go wrong.
Again, I'm no fan of crypto (WRT how it's currently used, scams, etc), but there is no reason a permissioned blockchain couldn't do millions of transactions a second, all with real-time settlement, at a cost lower than batch processing.
> all of those costs are a factor of the originating individual transactions
Correct, to a degree. Hub-and-spoke systems (clearinghouse, with banks at the periphery) are cheaper and more efficient than an everything-connected topology. The clearinghouse can run cheap rails because it knows it has pushed those problems to the periphery. The main missing factor, however, is float.
Float makes RTGS more expensive than batched settlement. If you give me RTGS rails, I can batch on top of it and recycle the yield on float into savings, possibly rebates (or credit, e.g. how banks front credit against deposited cheques).
The batch mechanism will always be cheaper under real-world conditions. That's what I want to emphasize. This isn't an artefact. It's fundamentally inescapable.
Net settlement is a useful abstraction. Instead of a fully meshed network with every bank account in the country that was active that day having to be settled against each other, you can reduce the number of nodes to “just” the 14,000 banks and credit unions in the USA. Even that is simplified by running interbank settlement through a central clearinghouse at the Federal Reserve.
As long as operating a connection between two accounts has a non-zero cost and resolving consistency problems has a non-zero cost net settlement will be cheaper and easier.
Yes, but pretty much all of those costs are a factor of the originating individual transactions. In reality net settlement is just one additional transaction where things can go wrong.
Again, I'm no fan of crypto (WRT how it's currently used, scams, etc), but there is no reason a permissioned blockchain couldn't do millions of transactions a second, all with real-time settlement, at a cost lower than batch processing.