Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Report on Stablecoins [pdf]

home.treasury.gov

Post reply on HN
Print view View original

271–280 of 697 posts

Re: Report on Stablecoins [pdf]

#271

Post by robocat »

wpietri wrote: post #111
dustingetz wrote: post #80

Earlier quoted context omitted.

Risk is that a tether run causes all of crypto to collapse, not just USDT. How many actual dollars are in the system? Everything real has been exfiltrated through electricity bills, taxes and early adopters selling, the entire crypto economy is a hollow shell, leveraged on retail deposits.

Exactly. Ultimately cryptocurrencies are a negative-sum game in that they take in real money and just move that money around, while spending some on overhead. In contrast, imagine investing in, say, a new fast-food franchise joint. They money you put in there is used to acquire assets that are used to produce goods that people will pay to consume. If it's a well-run business, the value of the outputs will be more tha…

> imagine investing in, say, a new fast-food franchise joint

Let us imagine instead that you want to invest in Burger King. You buy some shares in Restaurant Brands International (QSR). When you own those shares, what does that actually mean - how is that connected to the purchase of burgers?

I think share ownership is often a better metaphor for many cryptocurrencies than fiat currency. Especially when considering shares like Tesla, Hertz, or GameStop.

Where does the value of a share come from? Can a company steal all your money? What actually records your share ownership? How are profits calculated, and how do you get them?

Re: Report on Stablecoins [pdf]

#272

Post by WhisperingShiba »

zabatuvajdka wrote: post #267
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…

If a recession is bad enough some will panic and pull it all out. The reality is that crypto is not essential—it’s convenient and has potential but it’s value is backed by what? Other financial assets are backed by stuff like voting rights in a company or a physical asset. Hence: people will dump crypto first. I suppose Ethereum is different because it is backed by the functionality provided by the distributed Turing…

Money is not essential either, mind you.

Oxygen, heat, water, food. In that order. At least crypto is 'backed' by math. I expect the currency to dump will be related to who, and not what, is backing each asset class.

Re: Report on Stablecoins [pdf]

#273

Post by Tenoke »

BoiledCabbage wrote: post #257
Tenoke wrote: post #237

Earlier quoted context omitted.

I've cashed out way less USDT, just not through Tether themselves. Comparing it to Squid Game which you can't even sell to others is ridiculous.

While I assume I know what you did, rather than go with that, describe how you cashed out and I'll explain how I believe that supports why it's ultimately a scam.

By selling it for fiat on an exchange and then sending that to my bank account. Same way I'd cash out shares. Whatever your beliefs about it's support, it's not comparable to Squid Game which you literally couldn't sell from the start. And to be frank, if you are exaggerating that much I'm less inclined to believe you are evaluating it honestly .

Re: Report on Stablecoins [pdf]

#274

Post by cinntaile »

[deleted] wrote: post #259
jbusma wrote: post #241

Earlier quoted context omitted.

As a holder of crypto, you are both a customer and an owner. You pay a fee for each transaction you send, just like any other service. b However, your holdings increase in value the more other people use the same chain because the value of the entire ecosystem needs to scale proportionally to the value people are attempting to transact across it. Financial systems, like social networks, and most businesses coming out…

[deleted]

> You're completely twisted up. This is largely tinfoil hat economics and conspiracy theories.

It's ok to disagree without resorting to arguments like these, they just poison the discussion.

Re: Report on Stablecoins [pdf]

#275

Post by nostrademons »

jonwinstanley wrote: post #197
nostrademons wrote: post #132

Earlier quoted context omitted.

There's a bunch to unpack here, on both sides. To start with, I'll say that I agree with the mainstream view that cryptocurrency isn't actually creating wealth, in the sense of non-financial real goods that improve people's lives. It's redistributing it. Everybody's crypto gain comes at the expense of somebody else's crypto loss. I'll also throw in that folks who say "HFSP" are often the losers, because they're the o…

Can you explain how all gains are from other peoples losses? Someone invented a technology. Initially it was worth zero. Now it’s worth 1tn. The gains are from the gradual realisation that the technology has some merits. There are way more gains than losses… so far at least.

Other than the number in someone's bank account, what do you get from cryptocurrency?

With technologies like washing machines and dishwashers and stoves, it's pretty easy to see the real gains in wealth: you save labor. Ditto cheap housing and automobiles: you can live places you wouldn't before, which opens up a yard and white picket fence to people who previously lived in tenements. The Internet opened up a whole new world of information, which let people start businesses, learn new skills, apply for jobs they wouldn't otherwise know about, plan vacations, etc.

With cryptocurrency, the product is money. Money isn't wealth though; it's something you can trade for wealth. And whatever money you get from cryptocurrency got paid in by someone who newly bought what you just sold. There are people who have bought houses with gains from crypto (more power to them!), but that's paid for by other people putting money into crypto and getting nothing tangible in return. For those other people to get tangible benefits, somebody else would have to put money into crypto, and so on.

Money is a measurement tool, not a thing in of itself. In a properly functioning economy you get money when you create wealth, but money isn't itself wealth.

Re: Report on Stablecoins [pdf]

#276

Post by paulryanrogers »

swader999 wrote: post #213
adamc wrote: post #203

Earlier quoted context omitted.

In the case of the USD, the existence of a powerful government with a variety of powers (including coercive ones). Nothing is guaranteed in life, but it is orders of magnitude different from a digital currency offered by private individuals.

Sure and I agree the USD at the moment has an incredible backing. Also it being the reserve currency and base for most other currencies and commodities is no small thing. You could argue that BTC is backed by one of the most powerful networks of computing power on the planet. I don't think that's better than what the USD has, but it isn't 'Nothing'. The fact it can't be debased as easily as fiat currencies is not a t…

It could be debased rapidly through collective regulation and enforcement. While that hasn't happened yet, at least consistently, there's no guarantee it won't happen.

Re: Report on Stablecoins [pdf]

#277

Post by unicornmama »

zabatuvajdka wrote: post #267
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…

If a recession is bad enough some will panic and pull it all out. The reality is that crypto is not essential—it’s convenient and has potential but it’s value is backed by what? Other financial assets are backed by stuff like voting rights in a company or a physical asset. Hence: people will dump crypto first. I suppose Ethereum is different because it is backed by the functionality provided by the distributed Turing…

What real world applications rely on ETH? All I see are apps that operate in the crypto space playing finance games with cryptocurrencies.

Re: Report on Stablecoins [pdf]

#278

Post by arcticbull »

caf wrote: post #248
arcticbull wrote: post #218

Earlier quoted context omitted.

That's not quite correct, although I understand your sentiment. When you own a share of Square (or Visa, or PayPal) each time a transaction takes place on their network, a portion of that transaction (revenue minus costs) accrues to the company - and by extension increases the intrinsic value of your share. The transaction revenue is spent on furniture, on R&D, on employees and on buffing up their cash position. As a…

This all sounds intuitively correct, and it seems that similar arguments can be made about gold bullion, right? It costs some amount of money every year to mine, refine, transport and store it, and none of that is accruing to the actual holders of bullion. (One difference being that there is some residual value of the gold for industrial and jewellery uses, but that's hardly what's keeping the bullion price where it…

It's similar gold, yes. Gold is an unproductive asset. You are correct that there is base demand for it in the form of jewelry and electronics. In fact, a percentage of the world's gold output goes into making Bitcoin miners each year. However, its value is not supported by its demand in these industries. This is why I personally do not invest in gold.

The difference is that if you shut down gold mining, existing gold would still retain all its value. If you were unable to protect your gold reserves, they still retain all their value. If you shut down Bitcoin mining it's immediately worth nothing. In fact if you reduce your energy expenditure below some unspecified threshold it becomes utterly worthless. Mining gold consumes resources, but once extracted it does not. I would consider it to be zero-sum, as compared to the negative-sum nature of Bitcoin.

I would argue if institutional demand and even jewelry demand for gold fell, it would still be a fairly valuable commodity, and its use in electronics would likely expand substantially as it became less expensive. Connectors, switches, wires, PCB contact plating. All big demand drivers, and gold is better than the status quo - just too expensive at the moment.

Re: Report on Stablecoins [pdf]

#279

Post by RustyConsul »

arcticbull wrote: post #264
RustyConsul wrote: post #250

Earlier quoted context omitted.

Also, not quite correct. Bitcoin isn't figuratively a store of value, it actually is. The amount of bitcoin on DeFi, backing collateral for flash loans and Stablecoin minting is astounding. >When you own a share of Square (or Visa, or PayPal) each time a transaction takes place on their network, a portion of that transaction (revenue minus costs) accrues to the company - and by extension increases the intrinsic value…

> Bitcoin isn't figuratively a store of value, it actually is. It's a speculative, negative-sum MLM token. I suggest reading up on what a store of value is. [1] I'm not saying there aren't ways of monetizing it within the network - which may indeed create value, but intrinsically, it is a negative-sum asset, a mechanism of redistributing real cold hard dollars from new participants to old entrants and miners. It crea…

It seems our difference in opinion comes from our definition of value.

I know people point to the current system and infrastructure of stock exchanges, SWIFT, the IMF, Central Banks, Retail and Commercial Banks, Internet Banks (Such as Stripe, Paypal, ETC.), Credit Unions, Savings and Loan Associations, Investment Banks and Companies, Brokerage Firms, Insurance Companies as working good enough. But for me... Occams razor hits me hard. Doesn't it seem weird that through this complex system of interactions, we can recreate all of that in Code? If there was no value in it, why did we create all those institutions in the first place?

If we can recreate those in a more humane, democratized, decentralized way, I think it's worth the .001% of the global financial system that it currently is. Even if it's grabbing 5% of the current headlines.

Re: Report on Stablecoins [pdf]

#280

Post by [deleted] »

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…

[deleted]
Post reply on HN