It would be interesting to do a find “stablecoin” and replace with “fiat currency” command on this paper to see how it reads
Report on Stablecoins [pdf]
421–430 of 697 posts
Re: Report on Stablecoins [pdf]
#422Earlier 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…
Exactly. Nobody before 2009 would have described a highly volatile unbacked synthetic commodity as a "store of value". That's just what Bitcoin partisans shifted to when they realized it was unworkable for its stated purpose as a payment system. E.g.: https://avc.com/2017/08/store-of-value-vs-payment-system/
Re: Report on Stablecoins [pdf]
#423Earlier quoted context omitted.
There were timestamping services which people paid for before bitcoin. So, there is some price people will pay in order to be able to demonstrate in the future that some data existed at or before a given time. A decentralized ledger also provides this purpose. Of course, at current transaction fees on most blockchains, it would be wasting quite a bit of money to make a transaction just to timestamp a single thing. Th…
The blockchain is a pretty terrible timestamping service as the block time varies based on the current hash rate and difficulty. From as little as 5.5 minutes to as much as 15 minutes. [1] It's at best a coal-powered monotonic counter. Given the massive variability you have to correlate it with an actual clock you trust lol, and if you trust the clock you may as well just use that. [1] https://bitinfocharts.com/compa…
by timestamping I didn't mean in terms of, getting the most precise time possible, but in terms of a very difficult to fake-in-large-ways timestamp.
I have at least slightly more trust in the bitcoin blockchain not having the times be falsified in a major way than I do for any of the centralized timestamping services where you are trusting the security of those companies' timestamping servers.
The reason why I say "slightly more" is because I do have a pretty large amount of trust in those timestamping sources.
Bringing up the coal-powered is irrelevant to my point, which is not about whether it is worth it, but whether it has any uses.
Re: Report on Stablecoins [pdf]
#424Earlier quoted context omitted.
The blockchain is a pretty terrible timestamping service as the block time varies based on the current hash rate and difficulty. From as little as 5.5 minutes to as much as 15 minutes. [1] It's at best a coal-powered monotonic counter. Given the massive variability you have to correlate it with an actual clock you trust lol, and if you trust the clock you may as well just use that. [1] https://bitinfocharts.com/compa…
by timestamping I didn't mean in terms of, getting the most precise time possible, but in terms of a very difficult to fake-in-large-ways timestamp. I have at least slightly more trust in the bitcoin blockchain not having the times be falsified in a major way than I do for any of the centralized timestamping services where you are trusting the security of those companies' timestamping servers. The reason why I say "s…
> Bringing up the coal-powered is irrelevant to my point, which is not about whether it is worth it, but whether it has any uses.
Indeed, I was being glib. Apologies if it was out of place, was meant more for a smile than relevance.
Re: Report on Stablecoins [pdf]
#425Earlier quoted context omitted.
Oh, I understand why it hasn't collapsed already. I just don't see how Tether refusing to honor redemptions makes it more resilient to a run in progress, rather than less . If nobody wants to buy 1 USDT for a dollar, the peg will break all the same. If Tether stepped in as a buyer of last resort, that would make it more resilient- but if it doesn't, that worse for the peg, not better. It's better for anyone with phys…
Ah I see. The point I was making is that since it brazenly doesn't have backing and it openly gets to choose who is allowed to redeem, a run would be very hard to actually start. The exchanges themselves are incentivized to backstop the pegs (up to a point) out of their own capital to ensure their own survival. Beyond that, you are correct of course!
That makes some sense, since in normal banking you can bleed collateral until you're nearly dry without actually provoking a run, and when you're forced to start looking under your couch cushions for change and ask your depositors for patience, there's the trigger for your run. Tether doesn't have to worry about that...
But if "folks desperately try and exchange their USDT for something they can sell at a fiat-backed exchange" then surely the most desperate will be willing to take a haircut on their Tether to get out of it first, and then the Tether price collapses anyway, through some combination of the exchanges shutting down trading, drawing down their own collateral to maintain the peg (and then running out), and/or the exchange reluctantly allowing the price to float?
Like, the too-big-to-failness is definitely part of why it's still a thing, but that just means that the real buyer of last resort is other large crypto holders who don't want the ecosystem to collapse. That's great for Tether-the-company, and maybe good for Tether the coin, but it seems to me sort of distantly related to Tether allowing direct withdrawals.
There's an obvious mechanism for maintaining the peg if Tether allows large holders to redeem Tether: those holders buy any slightly discounted Tether, then hand it back to Tether and redeem it and keep the tiny profit. This will work but it's just Tether propping up the price with its capital with extra steps...
Re: Report on Stablecoins [pdf]
#426Earlier quoted context omitted.
There is value in having a monetary system though. And if BTC is a better system and more people find it's utility for barter or wealth preservation better it might appreciate more in relation to something like the USD which has many different characteristics.
It's a strictly worse monetary system by any measure. It's massively more expensive to transact, it's unbelievably inefficient - requiring as much power as Thailand and generating as much e-waste as the Netherlands to scribble 2-3 tx/sec into a ledger. That's 60 days of power for the average US household and 1 iPad of e-waste per transaction . [1] [edit](97% of all mining hardware will be thrown away without ever win…
> 97% of all mining hardware will be thrown away without ever winning a single block reward
And fewer than 50% of Thoroughbred horses ever win a single race. This is a silly clickbaity statistic and you know it. Come on, you're better than this arcticbull ;-)
Re: Report on Stablecoins [pdf]
#427Earlier quoted context omitted.
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…
> They money you put in there is used to acquire assets that are used to produce goods that people will pay to consume Is a decentralized, public ledger not a good people will pay (via cryptocurrency) to consume?
After a decade, the answer appears to be no. It's a solution looking for a problem.
Re: Report on Stablecoins [pdf]
#428Earlier 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…
And once again, we arrive at the real definition of cryptocurrency: It's not a currency, or financial system, it's a counterpoint to democracy.
Re: Report on Stablecoins [pdf]
#429Earlier quoted context omitted.
That's the same with many markets though. Market cap is a pretty silly metric to use for almost any market.
The stock market won't collapse in the same way because stocks have earnings and dividends (which is what the value is largely based upon). Sure: securities can go up, or down, in price almost arbitrarily. But they largely can't go below zero (aka: bankruptcy law protects against that), and they can't really go below the expected profits of the company (because shareholders are entitled to those profits. Worst-comes-…
Very few stocks actually pay dividends.
Re: Report on Stablecoins [pdf]
#430Earlier quoted context omitted.
I'm a crypto bear myself, but I'm not sure I agree with this argument. Plenty of services are built around "just moving money around" - accounting in this way has a ton of real value or else stripe, visa, paypal etc wouldn't be the huge companies they are. The questions are, whether "investing" by buying and holding is the right way to capture the value that this produces, and whether the benefits of doing it on a di…
visa, paypal... all provide value in allowing commercial transitions. Exchange of goods and services, digitally or on credit. The value it is providing is eliminating the inefficiency of barter (which cash also does), and allowing remote digital transactions, again good for societal benefit. There is no societal benefit to buying, holding, selling a crypto currency. The thing that could provide societal value is smar…
More and more I wonder if there’s a cultural/community aspect to crypto. Humans are meaning and group seeking animals and there is a hard to break value from that relationship. While some are likely ephemeral (hype coins like shiba) the amount of community formed around ETH and BTC is non-trivial and provides something akin to “value”.