Report on Stablecoins [pdf] • Hacker News Board

Re: Report on Stablecoins [pdf]

#121

Post by NikolaNovak » Mon, Nov 01, 2021, 9:18 PM UTC

whatshisface wrote: post #109

NikolaNovak wrote: post #87

Earlier quoted context omitted.

>>There's a canonical toxic response to this = HFSP. I don't feel this was your actual response, but I still need to address it because I don't understand how anybody ever can have that as a remotely legitimate, thought-out response. How can any financial instrument/currency make everybody "rich", in any real terms? If you gave everybody million USD tomorrow, it'd crash so bad that we'd be right back where we came fr…

> How can any financial instrument/currency make everybody "rich", in any real terms? By organizing economic activity in a more efficient way than our present system of centrally planned debt supplies. That's what currency is "for" - organizing real activities.

I get that, at some high level; but I'm not really seeing any of the current coins being actively used as currencies as much as investment / static store of value. They all look more like Gold than Dollar, to my ignorant eye

Re: Report on Stablecoins [pdf]

#122

Post by wpietri » Mon, Nov 01, 2021, 9:18 PM UTC

vineyardmike wrote: post #3

> To address risks to stablecoin users and guard against stablecoin runs, legislation should require stablecoin issuers to be insured depository institutions, which are subject to appropriate supervision and regulation, at the depository institution and the holding company level. > To address concerns about payment system risk, in addition to the requirements for stablecoin issuers, legislation should require custodi…

Stablecoin issuers are already effectively banks. In particular, wildcat banks:

https://en.wikipedia.org/wiki/Wildcat_banking

Spoiler alert: there's a reason we had 150 years without wildcat banks.

Re: Report on Stablecoins [pdf]

#123

Post by Trias11 » Mon, Nov 01, 2021, 9:18 PM UTC

Word "risk" appears in this doc 130+ times.

However the sole existence of stablecoins and crypto is due to the fact that legacy, corrupt financial institutions and irresponsible government fiscal policies present the biggest risk to people wellbeing.

So all these "risk" talks is a prerequisite for more taxes and more regulations that will only accelerate the natural evolution away from outdated, corrupt, centralized legacy institutions.

Re: Report on Stablecoins [pdf]

#124

Post by chizhik-pyzhik » Mon, Nov 01, 2021, 9:20 PM UTC

okareaman wrote: post #64

Historically, we've had major bubbles and crashes in all kinds of financial markets, from stocks and bonds, to property and dotcom stocks. Is there any reason to believe that cryptocurrency is more stable and we won't have a catastrophic crash?

In theory, cryptocurrency should be more resilient through greater transparency; anyone can inspect a smart contract and see how it works, what collateral it holds.

In practice, non-algorithmic stablecoins like Tether have very little transparency. I hope in the long run the market will gravitate towards algorithmic stablecoins like DAI.

Re: Report on Stablecoins [pdf]

#125

Post by chizhik-pyzhik » Mon, Nov 01, 2021, 9:21 PM UTC

gzer0 wrote: post #44

This is specifically referring to non-algorithmic stablecoins. "Stablecoins that are purportedly convertible for an underlying fiat currency are distinct from a smaller subset of stablecoin arrangements that use other means to attempt to stabilize the price of the instrument (sometimes referred to as “synthetic” or “algorithmic” stablecoins) or are convertible for other assets. Because of their more widespread adopti…

This is a very good point. The risk profile of centralized stablecoins like Tether and USDC is way, way different from something algorithmically controlled like DAI.

Re: Report on Stablecoins [pdf]

#126

Post by panic » Mon, Nov 01, 2021, 9:21 PM UTC

nostrademons wrote: post #81

panic wrote: post #54

Earlier quoted context omitted.

Why are you so committed to erasing the difference between humans and computers in order to place humans below computers?

Realistically I don't have the power to put humans either above or below computers. That'll depend upon the independent choices of billions of humans and hundreds of billions of microprocessors. I've found that having an accurate model of the world - one that can generate likely predictions - is very important for profit now and potentially for survival in the near future. Knowing that people are frequently blind to…

Sure, but your comment doesn't reflect an accurate model of the world -- brains and computers are not the same kind of thing, and humans are more than just a brain. I know there are powerful people trying to convince us that your model is accurate, though, with the goal of getting us to allow their computers more control over our lives. I'm worried that people are buying into this view, not because they believe it's an accurate model of the world, but because they think it's inevitable that these powerful people and their computers actually will end up in control, so they'd better prepare for that future.

Re: Report on Stablecoins [pdf]

#127

Post by nscalf » Mon, Nov 01, 2021, 9:22 PM UTC

dexwiz wrote: post #49

All these coins are proven to be worthless. When speculation is making everyone money, the money isn't worth much. Edit: Love the immediate fear downvote. No one wants to hear their gold is really just shiny dirt.

Amazing how many people are die hard advocates of being closed minded. The net market for crypto hits over a trillion dollars, and you still say things like this declaring they are proven to be worthless. This is posted on a report by the US government on a technology that is effectively a digital wrapper to use the US dollar easily online. How is there no worth in that?

Out of curiosity, what would it take to change your mind on this? Is there not even a single dollar of real value in the crypto world?

Re: Report on Stablecoins [pdf]

#128

Post by trophycase » Mon, Nov 01, 2021, 9:22 PM UTC

Animats wrote: post #47

This is good. The backing of stablecoins is a very real issue. As the Treasury points out, there's a very real possibility of a run. Two stablecoins have crashed so far, SafeDollar SDO, and $TITAN. They went all the way to zero. Can Tether survive a net outflow? Probably not. They don't have the collateral. Dai is really a derivative of Etherium. Dai is backed by Etherium at 150%. So value in Dai is at risk if the pr…

Actually a huge fraction of DAI is backed by USDC and other assets.

Re: Report on Stablecoins [pdf]

#129

Post by whatshisface » Mon, Nov 01, 2021, 9:22 PM UTC

Muromec wrote: post #116

whatshisface wrote: post #109

Earlier quoted context omitted.

> How can any financial instrument/currency make everybody "rich", in any real terms? By organizing economic activity in a more efficient way than our present system of centrally planned debt supplies. That's what currency is "for" - organizing real activities.

So what kinds of economic activities, besides ransom, drug sales and donations to wikileaks and others not liked by u.s. government does bitcoin facilitate? Remittances to countries under repressive economical regime or under embargo? Not saying those are good or bad, just aiming to quantify the market size.

The potential of cryptocurrency is a lot brighter than the potential of Bitcoin. The right investment to make in cryptocurrency isn't buying it, it's thinking about it and economics to try to figure out how it can be gainfully used. Ethereum has many potential applications and so may be worth buying, but only if you have a use for it. (The price of every asset is such that buying it is a martingale.)

BTC isn't even truly decentralized - it's Chinese.

https://www.statista.com/statistics/1200477/bitcoin-mining-b...

Re: Report on Stablecoins [pdf]

#130

Post by [deleted] » Mon, Nov 01, 2021, 9:22 PM UTC

mrandish wrote: post #86

dragontamer wrote: post #62

Earlier quoted context omitted.

The downvotes are because "worthless" is hyperbolic and unhelpful. Clearly, the coins have value because someone out there feels like paying money for them. More importantly: we _HAVE_ to understand the market dynamics here. What's going on is very human and very important to realize. Matt Levine from Bloomberg has a very simple explanation: the cryptocoin world has discovered "senior debt vs junior debt", and are us…

Your post makes a lot of sense to me from a fundamental econ perspective, however, I know I don't know enough about the topic of crypto-currencies in general to trust my opinion much. I'd love to see the strongest possible counter-argument to yours to help me understand why so many people seem to disagree.

[deleted]