Back when Canadians used to travel to the US, it was common for a situation like this to arise: "Hey, I'll send you money. Do you have Venmo?" And then, as a Canadian, you'd say, "sorry, we don't have Venmo in Canada. We use our own proprietary system called Interac e-Transfer. Do you have PayPal? I think I still have an account. Let's try." Once this exchange was over, both parties would then sit there and wonder why the hell it's still so expensive and awkward to move money around.
As another example, take global remittances. These are payments sent by a person back to their country of origin, usually to a family member. And in 2024, it was estimated that some $905 billion was sent around the world for this reason, with about $685 billion of it being sent to low and middle-income countries. But it was also estimated that the average cost of doing this was around 6.62%, which is double the UN's target of 3%.
For anyone who has used crypto before, this feels painfully archaic. Sending a wire transfer can cost over $50 and it can take time to clear, assuming that you got in before the bank's cut-off time. Sending things via a blockchain is cheap (it's pennies now) and it happens instantly and securely — 24 hours a day, 365 days a year. This was always one of the promises of crypto, but now we're seeing it play out very clearly with stablecoins. Here's an example.
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Stablecoins are a type of cryptocurrency that have their value pegged to another asset, such as gold or a fiat currency. And at the time of writing this post, something like 99% of stablecoins are pegged to the US dollar. The benefits of this are twofold. Firstly, it creates price stability. You're effectively holding US dollars. But now you have a US dollar on a blockchain (or a tokenized US dollar), meaning you can do crypto things with it, like send it around the world instantly and for free.
The other benefit of this is that it can serve as a hedge against a problematic local currency. Would you rather hold the Argentine Peso or the US dollar? The use cases are powerful. So it's not surprising that, by some estimates, a quarter of all global remittances now involve some form of cryptocurrency. Argentina also happens to be the leading crypto market in Latin America. Between July 2023 and June 2024, the country recorded about $91 billion in crypto transactions.
It's fascinating to think about how all of this will reshape the global financial landscape. Already stablecoin transactions are threatening Visa in terms of overall transactions. All someone needs is a mobile phone and a crypto wallet. And by the way, as soon as you link a wallet to a human, you can also quickly determine how much money they've been sending/receiving, figure out tax liabilities, and so on.
Also noteworthy is the fact that the (vast?) majority of stablecoin transactions settle on Ethereum. It is the substrate powering this market, as well as many others. I don't know what that exactly means for Ethereum as a crypto asset. But I do believe it means something meaningful. And in this instance, it stems from a fairly simple want: "I would like to send you money cheaply and securely, and I don't want inflation to then kill my purchasing power."
Cover photo by Alistair MacRobert on Unsplash
Things have been pretty serious around here lately. We've been talking a lot about isolationist tariffs that make zero economic sense and that have been blatantly miscalculated, and so let's switch gears and talk about something a little more fun: toilets.
If any of you remember my post from earlier this year called "Takeaways from Japan," you might remember this:
Our toilets are in the stone ages. You’re not going to get yourself clean with just paper. You need a comfortable warm seat and highly adjustable jets of water. I never fully appreciated this need before the trip, but now I’m a true believer. It’s time for a new toilet.
Well, I meant it when I said it:
This week, I finally got around to installing a new TOTO WASHLET seat on my existing toilet. My bathroom may now look a little more geriatric, but it's a fantastic quality of life upgrade that more people, outside of Japan, should adopt. So why don't they?
The TOTO WASHLET seat was first created in 1980. And since then (and up until 2022), the company has reported selling more than 60 million units, with the majority of them being sold in Japan. As of 2021, it was believed that over 80% of Japanese households were equipped with some sort of heated bidet toilet.
Market penetration is much lower in the West. In the US, ChatGPT think it's less than 5%. And based on anecdotal evidence, this does not seem far off. I almost never see them in public places (though The Butcher Chef here in Toronto has one) and I rarely see them in people's homes.
My gut is that it's a combination of a lack of awareness and people thinking it's weird and/or unhygienic. I mean, is that wand clean? But if you travel to Japan, you will have an aha moment. So maybe TOTO needs to figure out a way to export this moment to the rest of the world through, oh I don't know, some sort of public toilet program.
Note: This post is not sponsored by TOTO. But I really wish it were, because then maybe I would have gotten my seat for free.
Among other things, insurance companies now use aerial photography, combined with AI, to better assess property-level risk. Here's an excerpt from Bloomberg Green:
“Weather and catastrophe losses are running ahead of the ability to manage them, and many insurers are having trouble sustaining their business because they’re not getting the right rates,” said Jay Guin, chief research officer of the extreme event solutions team at Verisk, a catastrophe modeling firm. “AI changes the equation.”
Zurich Insurance Group AG, one of the largest insurers in Europe, uses AI powered risk-modeling software to assess catastrophe risk and often tweaks it for its own purpose.
“If there’s fire hazard like vegetation, overhang or debris in your backyard that shouldn’t be there, we can tell you to lower the risk otherwise we may not be able to underwrite you,” said Ericson Chan, chief information and digital officer of the Swiss company.
What AI allows is a level of granularity that just wasn't possible when humans were the ones who had to do it. Insurers now talk about "continuous remote risk monitoring," meaning they can use AI-powered aerial imagery to constantly check on that risky debris in your backyard.
This feels like quite an improvement for the insurance industry. But when you more accurately price risk, I would imagine that it will lead to more insurers deciding to stay clear of certain risks and certain properties, as has already been the case in places like California.
Cover photo by Pim de Boer on Unsplash