Live data from Hacker News

Report on Stablecoins [pdf]

home.treasury.gov

451–460 of 697 posts

Re: Report on Stablecoins [pdf]

#451

Earlier 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…

You could make the same claim about any kind of money though. Whose to say the USD or GOLD or CAD or tree bark is real money? A productive asset is an entirely different thing. It's not easy to convert an asset for instance or walk across a border with it. People make the fundamental mistake thinking these things are investments, they aren't, it's just currency or forex speculation that we are doing here.

> You could make the same claim about any kind of money though.

This is one of the things I find hilarious about cryptocurrency discussions. When I point out it isn't a good asset, people argue it's really a currency. When I point out it's a bad currency, people argue it's an asset. I'd love it if you all could get together and agree on what it's supposed to be good for and just leave the rest of us out of it.

But addressing your point directly, it's bad as a currency. It was launched in 2009 as e-cash, and for a while people argued it was going to be a great medium of exchange. Now, more than a decade later, Bitcoin is doing what, 100m transactions per year? Most of which are not real economic transactions for goods and services. Venmo, which started around the same time, does over 2 billion. M-Pesa, a "digital money" solution the same age does 15 billion. US credit transactions? 45 billion. Debit? 75 billion per year. And unlike Bitcoin, most of those are what people would call real transactions. Bitcoin's real use as a currency/payment system is a rounding error.

Anyhow, as others point out, actual major currencies are backed by very sophisticated organizations dedicated to maintaining the value of those currencies. Which are in turned supervised by national governments, most of which are democratically elected.

For Bitcoin, at best you have a set of shadowy organizations manipulating the market to their own advantage. E.g., reasonable people suspect that Tether is behind quite a bit of Bitcoin price appreciation. They have been proven to be liars about what they're doing and how much money they have. This is great for creating hype and volatility, but it's very much not what you want in an actual currency.

Re: Report on Stablecoins [pdf]

#452

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…

> 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.

I'm no Crypto fan, but this is wrong.

Plenty of new coins get minted which are redeemed for real money. This is basically the credit creation cycle[1] as seen in traditional banking (where banks create money by lending the same deposit out multiple times simultaneously) except in this case there is often no equivalent of a deposit (except sort-of staking in some cases).

[1] https://www.economicsnetwork.ac.uk/archive/starkey_banking

Re: Report on Stablecoins [pdf]

#453
post #53

Earlier quoted context omitted.

> there is no central issuing authority; Dai is minted in exchange for Ethereum (and other cryptocurrencies), not fiat currencies Its not fiat-stable, which is probably their focus. fiat-stable coins are basically crypto bank notes: https://en.wikipedia.org/wiki/Banknote Also, > a future where reality is determined by computer code and people are but players in the script. Corporations are "things" in a legal sense -…

The 9th Circuit ruled that source code is protected under the First Amendment in the Bernstein case, which legalized the export of cryptography. If you just publish the contract and don't have any ongoing administration, I would think that gives you a pretty strong legal defense.

Publish the code, or activate/enable/fund/start/whatever to instantiate the activity.

If you just publish it github - thats probably a good defense (linux T isn't to blame for all bad things that ran on linux).

If you publish a smart contract in a way that enables people to start using it, then that may not be covered. While its different than actively running an API/Service that needs continuous/paid hosting, its probably a grey area at best.

Re: Report on Stablecoins [pdf]

#454

Earlier quoted context omitted.

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 r…

> 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…

> This is a lot like the programmer tendency to want to re-write instead of refactor because to understand a system is way harder than to set out on a quest to build a new one.

And what if they did want to refactor the existing system. Can they? What does that iteration process look like? Is the system currently evolving to fit everyone’s needs?

Remember, RMS actually did want to refactor the printer. He just wasn’t allowed to. [0]

Contrast that with how fast things are moving in DeFi. It’s permissionless innovation at its best and worst. We can barely even wrap our heads around OHM, but nobody needs permission to fork it into SPELL. Systemic refactors happen faster. [1]

When somebody in the future doesn’t like a piece of decentralized infrastructure, they can _literally_ fork all of it and just make their change. With fewer black-boxes, we share more intellectual property.

[0] https://www.fsf.org/blogs/community/201cthe-printer-story201...

[1] https://thedefiant.io/olympusdao-forks/

Re: Report on Stablecoins [pdf]

#455
post #322

Earlier quoted context omitted.

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…

> There is no societal benefit to buying, holding, selling a crypto currency. If you live a country where the govt mismanages the economy and drop the value of the nation's currency then in that case BTC has a lot of value.

If you live in a country where the government mismanages the economy or the currency, Bitcoin is not a great choice. What most people use in that situation is just a different national currency. This is a well-known phenomenon known as dollarization or currency substitution: https://en.wikipedia.org/wiki/Currency_substitution

Re: Report on Stablecoins [pdf]

#456

Earlier quoted context omitted.

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”.

For sure. Bitcoin is in some ways better understood as a religion. If you're interested, I'd suggest the documentary LuLaRich, currently on Amazon Prime Video. It looks at the MLM/pyramid scheme LuLaRoe and does a good job conveying the quasi-religious nature of these things.

Re: Report on Stablecoins [pdf]

#457
My head is swirling with all the coins coming out these days. Have these coins all been around for some time or am I just hearing about them now?

I don’t know how this crypto shit will ever end. It’s basically speculation that there will always be a greater fool to buy your coin. Zero fundamentals. Can this really go on forever? Or will there be an ultimate bag holder at some point?

Re: Report on Stablecoins [pdf]

#458

Earlier quoted context omitted.

> Do you think we will forever be organized and segregated by governments? Since you asked, yes. I do. To me, it's like asking if a beehive will always have a queen. It's in our DNA. > Also, you're right. POW as a consensus method is flawed. But again, all V3 cryptos have essentially transitioned to delegated proof of stake at this point. I honestly don't know enough about "V3 cryptos" to speak to it, and I'm not try…

> Since you asked, yes. I do. To me, it's like asking if a beehive will always have a queen. It's in our DNA. Not the asker, but thank you for answering this--it goes a long way toward understanding where your arguments are coming from.

Places without a functional government have a history of doing pretty poorly.

I think the burden of proof that there is a possible future without government lies on those making that claim. That burden has definitely not been met and the thus the feverent belied in that claim by cryptocurrency bulls is not rational.

Re: Report on Stablecoins [pdf]

#459

Earlier quoted context omitted.

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…

> Do you think we will forever be organized and segregated by governments? Since you asked, yes. I do. To me, it's like asking if a beehive will always have a queen. It's in our DNA. > Also, you're right. POW as a consensus method is flawed. But again, all V3 cryptos have essentially transitioned to delegated proof of stake at this point. I honestly don't know enough about "V3 cryptos" to speak to it, and I'm not try…

Really enjoyed this convo, if you want a bit more of a long form of my thought process on this, read the Sovereign individual (With a grain of salt, it gets a bit wild)

My main point is don't completely dismiss a nescient technological field based on it's lack of utility now. Sustained development effort with real venture capital only dates back to around 2017, 2018.

All major silicon valley firms have launched funds to develop early research teams, nobel prize winning mathematicians developing protocols and some of these people are currently the richest individuals on the planet, just no one really know how much they actually have and obvious issues with liquidity withstanding.

> SHIB for instance

As many (If not more) of the crypto industry is marketing teams riding the 'Wave'. However, some of the projects have 100's of employees building infrastructure for the new internet. Check out Parity if you want an example of a true crypto company.

Re: Report on Stablecoins [pdf]

#460

Earlier quoted context omitted.

> Can Tether survive a net outflow? Probably not. They don't have the collateral. Luckily for Paolo & friends, their terms of service clearly state that they do not ever have to offer redemptions of USDT for dollars. Or even whatever IOUs and bits of string they may or may not have in reserve. Out of all the stable coins its the most likely to withstand a "run" because they do not have to pay you if you ask. In fact…

> The Crypto-USDT pairs will quickly go no-bid I think what you mean is the Crypto-USDT pairs will go no offer (i.e. no USDT bid) as people turn to dump crypto against a fiat leg.

and on the way the corresponding cryptos will all appear to shoot toward infinity, except the exchange shuts down for "maintenance" before that happens
Post reply on HN