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Report on Stablecoins [pdf]

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Re: Report on Stablecoins [pdf]

#381

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…

I'm no frothing at the mouth crypto advocate or fiat currency hating conspiracy theorist, but whatever you're trying to say, and the article you link to, seems like complete nonsense to me, and your snarky recommendation to "read up on what a store of value is" is silly.

> A store of value is an asset that maintains its value, rather than depreciating.

Value is just what others are willing to pay for something at a point in time. Literally nothing is guaranteed to maintain it's value, not even US Treasuries. So this is just circular logic saying "things that maintain value are value stores" and "if something that previously maintained it's value no longer does, then it is not a value store".

> Gold and other precious metals are good stores of value because their shelf lives are essentially perpetual.

Gold and other precious metals are terrible stores of value, their dollar values are incredibly volatile, they are incredibly expensive and risky to store and transact with, and contrary to popular belief, they really don't actually have much "intrinsic value". Let alone that "intrinsic value" is a nonsensical concept. "Intrinsic value" is meant to be understood roughly as "useful for some practical purpose", but valuations clearly often have nothing to do with their practical purposes. A stick or a basket can have very significant and diverse intrinsic values too, but that doesn't mean it has value. Likewise, some sticks and baskets might have very high values, despite actually not being very good sticks or baskets! (eg if they're antiques or archeological artifacts or whatever)

> A nation's currency must be a reasonable store of value for its economy to function smoothly.

Most central banks aim for 2% inflation per year, literally guaranteeing any amount to become worthless over time if stored in currency. (vs bonds or some other appreciating asset)

> intrinsically, Bitcoin is a negative-sum asset, a mechanism of redistributing real cold hard dollars from new participants to old entrants and miners.

Just what. Bitcoin is strictly positive sum under any sane definition. Unlike MLMs or pyramid schemes, Bitcoin never alleges to return anything other than Bitcoin.

> It creates nothing

Neither do currencies. They're just currencies. Their purpose is to be means of transacting things that are created, that otherwise wouldn't be created, if there was no means to transact. Bitcoin does that too. But in Bitcoin's case, it actually does create something: it creates the ledger of transactions itself, the wallets, the ability to sign things etc, which currencies don't.

> Systems built on top of it might, exploiting let's say regulatory arbitrage, facilitating crime or gambling, but intrinsically, it creates no value.

Even if you disagree with the valuation of Bitcoin and how inefficient the mining is (and I do), the realized idea of a distributed, tamper-proof ledger is useful, and thus has "intrinsic value" just like toilet paper or gold. (again, intrinsic value is a nonsensical concept, but under that logic, it does)

Re: Report on Stablecoins [pdf]

#382

Earlier quoted context omitted.

The only practical differences in the tech is that it wastes more power, has no insurance, has no fraud remediation, and has no safeguard against volatility. I guess the potential anonymity too, but that's only really a practical benefit if making an illegal transaction. The only time I can ever see a cryptocurrency being worth it is if you do not have any central authority you can trust. If we ever get to the point…

I can protect my own money, thank you. I do not need a nanny. Anonymity might seem redundant to you and other people who "have nothing to hide". However, in a slightly more dystopian reality -e.g. when we are forced to use CBDCs- the government might choose to block you from using your hard earned money because you posted a criticism of the president on twitter.

> the government might choose to block you from using your hard earned money because you posted a criticism of the president on twitter

Um, I don't really see how cryptocurrencies are going to help you much when that same government just tosses you in jail instead. In fact, there are governments in our present reality that will throw people in jail for saying the wrong thing on twitter, so that really isn't an outrageous thing to imagine.

Re: Report on Stablecoins [pdf]

#383
post #182

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?

Crypto "expert" here. We will have a catastrophic crash, it's normal and natural. But, the tech is here to stay and is 100x better than existing solutions. Crypto is changing the world, one crash at a time :)

I feel like if you look at the last 20 years and don't fall on knees at the Church of Fiat, then you have no idea what you're talking about. Crypto doesn't solve any urgent problems and is contributing to climate change as a bonus. Who is making use of crypto right now except crypto speculators and money launderers?

Re: Report on Stablecoins [pdf]

#384
post #31

Interesting to read this with an eye on the authors' mindset. Their understanding of stablecoins seems largely centered on Tether (and to a lesser extent, BUSD/USDC). A lot of their understanding is incorrect when applied to algorithmic stablecoins like Dai, eg. there is no central issuing authority; Dai is minted in exchange for Ethereum (and other cryptocurrencies), not fiat currencies; the effect of a run on Dai i…

> Overall I get the sense that the government is still people/organization centric and cannot wrap its head around a future where reality is determined by computer code and people are bit players in the script. Conversely, people in government tend to view crypto folks as senselessly computer-centric and unable to view macroeconomics as the result of human interaction . There is no such thing as value without exchang…

Exchange value only matters when there's trade. My view of crypto is "wrong in the right direction" because it currently addresses macroeconomic coordination via mimicry of traditional finance. The technologies it uses to achieve decentralized coordination do matter, though. Automated consensus on a large scale is meaningful. But it needs a post-trade, natural-systems view of the world to really make sense.

Re: Report on Stablecoins [pdf]

#385

Earlier quoted context omitted.

> 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…

In my book, there's some value in protecting the average Joe from the incessant dollar printing that decreases the value of the dollars in their saving accounts. That's just one argument for Bitcoin, there are more. For example, it provides the opportunity to second/third world countries to break free from the IMF debt slavery.

> In my book, there's some value in protecting the average Joe from the incessant dollar printing that decreases the value of the dollars in their saving accounts.

This is a complete misunderstanding of the role of currency in a modern economy and the mandate of the federal reserve, which is to maintain a low, predictable rate of inflation to incentivize investment and maximize employment. Literally any asset will "save you" from the "relentless printing." That's the role of an asset, not a currency.

> That's just one argument for Bitcoin, there are more. For example, it provides the opportunity to second/third world countries to break free from the IMF debt slavery.

They're all basically debunked, but advocates trot them out and try and Gish gallop over any criticism.

Re: Report on Stablecoins [pdf]

#386

From the "Recommendations" section: > Legislation should address the risks outlined in this report by establishing an appropriate federal prudential framework for payment stablecoin arrangements.29 In particular, with respect to stablecoin issuers, legislation should provide for supervision on a consolidated basis; prudential standards; and, potentially, access to appropriate components of the federal safety net. To…

Exactly. Regulation can only be long-term good for the space, which is sorely lacking in legitimacy.

I'm not so sure. There's a type of person who would deem the US Government having a privileged role in coin governance as a legitimacy-reducing factor for that coin, and that type of person is over-represented in crypto circles.

Also there's a possibility that whatever coins decide to comply end up spending their reserves on humans-in-the-loop to ensure compliance, thereby giving an advantage to the noncompliant coins.

Something analogous to this happened where I'm from: We voted to legalize recreational cannabis, but most people still use the black market because regulatory burdens put the legal shops at too great of a disadvantage to be competitive.

Re: Report on Stablecoins [pdf]

#387
post #357

Earlier quoted context omitted.

After that hedge fund issued a $1M reward on Tether backing I did some more investigation and the thing I realized is that 1) Tether is inherently backed by BS and 2) crafting any sort of Tether short is near impossible because everyone in the game - Tether, the exchanges, etc. - will all be against you if you're winning in the short. There's that scene in "The Big Short" where Mark Baum and crew know the subprime bo…

You can easily short Tether on DeFi platforms that can’t be locked down.

Not really, and you shouldn't try. The highest recorded price for 1 USDT was $1000 at a centralized exchange, and do you really trust your counter-party in a DeFi transaction not to get flash-loaned into oblivion or to rely on a bad oracle? [1] You also have to post crypto collateral which may get rekt alongside a Tether collapse. Who even knows what that might look like? The only way to win is not to play.

[1] http://rekt.news

Re: Report on Stablecoins [pdf]

#388

Earlier quoted context omitted.

> Doesn't it seem weird that through this complex system of interactions, we can recreate all of that in Code? All of these systems are already software. > If there was no value in it, why did we create all those institutions in the first place? Centralization makes them massively more efficient than crypto. If there was a way to make them more efficient that did not involve throwing risk models out the window or reg…

Do you think we will forever be organized and segregated by governments? Do you ever think a human being can be a sovereign individual in his own right, without owing fealty, taxes and morality to a government in some future? The current financial system is not all software. When i pay in crypto, i give you my money. When i pay in the current financial system I am giving you every bit of information to rob me blind a…

> POW as a consensus method is flawed.

It's not flawed, just hardcore. It's like the gold bars sitting in vaults deep underground in London, rarely moved and usually just relabeled to account for change in ownership. Every now and then someone gets spooked and asks to take custody, and it's expensive as hell to move it but you can lay your hands on it and know your ownership is secure.

Re: Report on Stablecoins [pdf]

#389
post #143

From a Coinbase exec: "Tether is a ticking time bomb. Whenever it goes off, it'll be a 70-80% market correction for 2-3 years" Crypto continues to help nobody and achieve nothing in the real world. This administration has been criminally slow in shutting it down, lobby is strong.

"70-80% market correction for 2-3 years" is a contradiction. A correction brings asset prices back in line with their true values. That a coinbase exec thinks the cryptocurrency is 3-5x overvalued is wild, but if that is true I don't see any particular reason to expect the prices to go back within a few years.

Re: Report on Stablecoins [pdf]

#390

Interesting to read this with an eye on the authors' mindset. Their understanding of stablecoins seems largely centered on Tether (and to a lesser extent, BUSD/USDC). A lot of their understanding is incorrect when applied to algorithmic stablecoins like Dai, eg. there is no central issuing authority; Dai is minted in exchange for Ethereum (and other cryptocurrencies), not fiat currencies; the effect of a run on Dai i…

Perhaps I'm oversimplifying your comment, but it seems like a very good thing that the government continues to be people/organization centric and doesn't embrace a future where "reality is determined by computer code and people are a bit players". We should hope our democratic institutions continue to operate this way.

You have a valid point, and to some extent government should continue to be people centric. But there is value in replacing a some of the system in place by code.

IMO, a lot of ambiguous laws and polices create different outcomes for similar inputs, and that should not be the case of legal systems and institutions. Money is perhaps the first of the government aspects to be easier to express in decentralized code, but I won't be surprised to see this as only the beginning of a trend. Think autonomous cars replacing drivers and other interesting similar developments.

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