Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

Post by JackFr » Sat, Jun 05, 2021, 2:00 AM UTC

lubujackson wrote: post #51

lhorie wrote: post #37

Earlier quoted context omitted.

Honest question. How's Tether imploding different from e.g. a public company suddenly shutting down and its stock price going to zero? I imagine the two scenarios being similar in the sense that anyone holding tether would eat a big loss, but aside from the event obviously affecting investor sentiment, wouldn't it just be more or less business as usual for other coins? As in, couldn't BTC/ETH/whatever people just use…

Tether imploding isn't at all like a public company closing shop, because public companies are Real Things and have public data about sales, revenue, employees, business relationships, etc. And even the ones that implode go through bankruptcy court where their assets are doled out to debtors and shareholders. Tether imploding would be more like a bank run, where you can see YOUR MONEY as a number on the screen then w…

Post by nodesocket » Sat, Jun 05, 2021, 2:20 AM UTC

droffel wrote: post #61

nodesocket wrote: post #36

Earlier quoted context omitted.

I hold a decent sized block of USDC via BlockFi and earn 8.6% APY. I realize there is inherent risk (after all, I am earning 8.6%) but compare that to 0.5% earned at Goldman Sachs or traditional FDIC insured bank accounts and it's a risk I am willing to take. By default, BlockFi issues GUSD as their stablecoin of choice, but Gemini (GUSD) market cap is only $145m, whereas USDC market cap is 22 with a B billion. Ultim…

At 8.6% APY, would you say you believe you have a sub-8.6% chance of the funds disappearing in a given year? Considering that it would take over a decade to return the original capital in value, I feel that the compensation is low relative to the risk of loss. Ten years is a lot of time for a company to bungle your funds, especially in the cryptocurrency world.

Post by paulpauper » Sat, Jun 05, 2021, 2:29 AM UTC

TacticalCoder wrote: post #16

Animats wrote: post #10

I keep thinking of Madoff's fund. It was once called "the Jewish T-bill". It worked just fine until there was a significant net outflow. Then, total crash, because the backing assets were not there. Tether is way too much like that. Remember, Tether has no upside . There is no reason to ever hold Tether for any length of time. [1] https://www.timesofisrael.com/before-dying-bernie-madoff-lif...

> Remember, Tether has no upside. There is no reason to ever hold Tether for any length of time. It looks like USDC, issued by a company co-owned by Coinbase (YC incubated right?) and Circle, is quickly replacing tether. One year ago there were about 1/10th of USDC compared to tether, now it's half. Apparently USDC are really fully backed by real USD and the smart contract for USDC can block any address containing US…

Post by moltar » Sat, Jun 05, 2021, 2:33 AM UTC

simias wrote: post #23

young_unixer wrote: post #17

Earlier quoted context omitted.

Tether imploding would just mean a couple more years to stack up. People who don't understand the technology would flee, thinking it was just a fad, those that do understand it would stay, stack up and wait a few years.

Ah yes, the "technology". Any day now. Won't know what hit them. Around the corner really, alongside cold fusion and the chewing gum that replaces toothbrushes.

Post by dboreham » Sat, Jun 05, 2021, 2:47 AM UTC

catlifeonmars wrote: post #24

SkyMarshal wrote: post #11

Earlier quoted context omitted.

Bitcoin crashes and dips all the time. It's lost over 80% of its value at least four times since it launched, plus the recent big 50% drawdown. It slows the cryptoeconomy for a year or so, but doesn't stop it, and then there's another bubble again ~2yrs later. Bitcoin's high but natural volatility is not the same thing as the price collapsing due to the system itself fundamentally breaking. For example, the Global Fi…

What is the difference between natural volatility and the system fundamentally breaking?