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Report on Stablecoins [pdf]

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Re: Report on Stablecoins [pdf]

#481

Post by liquidise »

sub7 wrote: post #294
liquidise wrote: post #215

Earlier quoted context omitted.

> Crypto continues to help nobody and achieve nothing in the real world Crypto posts on HN seem to be a hotbed for these sorts of hyperbolic, wholly unsubstantiated and objectively false comments. I wish i understood what the motivation was for these sorts of replies.

Please show me a real world use case that's better than the status quo and is not speculation or gambling. It's been over 12 years and I'm still looking. Cryptoclowns can't use the it's too early excuse anymore. But they choose to listen to a handful of man children running around promising world peace via a distributed database.

Money transfers across borders. I have friends who live internationally and crypto has become our defacto way to transfer money.

But frankly, your presentation of the question leaves me doubtful you are looking for a meaningful answer here. The reality, as others have pointed out, is that there are lots of platforms in the space offering plenty of compelling services. You personally may not desire those services, but that doesn't change their viability.

Re: Report on Stablecoins [pdf]

#482

Post by wyager »

arcticbull wrote: post #287
wyager wrote: post #117

Earlier quoted context omitted.

The positive externalities from sound money and the concomitant demonetization of other assets (like real estate, oil, etc.) are massive , especially in the long term.

Real estate and oil are not money and therefore cannot be demonetized. One is a productive asset, the other a commodity. Words have meaning.

> Words have meaning.

Have you considered that you may simply be failing to comprehend the meaning?

In particular, "monetization" literally means "the process of turning into money" - one of several more specific meanings, which should be clear from context, is the conversion of a non-monetized asset with sufficient monetary properties into a monetized asset. A monetized asset (not monetary - that term is too overloaded, although "monetized" isn't much better) is precisely an asset which has a higher value than would be predicted from its expected revenues, commodity consumption value, etc.

If people are concerned about currency devaluation, where do they put their money? Whatever set of assets people turn to (equities, commodities, whatever) will be subject to additional demand purely qua wealth storage, pushing up the price of those assets beyond what you would expect from a pure discounted cash flow model - i.e. they become monetized (begin to function as money, in addition to whatever asset class one might naively assign them to).

So, with that in mind, let's address:

> Real estate and oil are not money and therefore cannot be demonetized

If people are using real estate, oil, (gold, equities, ...) as a place to stash their wealth to protect it from inflation or whatever, and all of a sudden there's a better option available for this purpose, demand for random "not money" assets qua money is going to drop, and they will cease to behave like money - demonetization.

Re: Report on Stablecoins [pdf]

#483

Post by wyager »

arcticbull wrote: post #218
mattnewton wrote: post #185

Earlier 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…

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…

> Bitcoin ~= a Starbucks gift card you hope appreciates in value when Starbucks sells more coffee

Are you under the impression that Bitcoin is a company? This analogy really doesn't make sense from any angle, even being extremely charitable, so it's hard to address.

Re: Report on Stablecoins [pdf]

#484

Post by Rexxar »

CryptoPunk wrote: post #120
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…

FYI, this individual has been deliberately misspelling Ethereum for 5+ years on Hackernews, as a form of mockery: https://news.ycombinator.com/item?id=9988438

It seems just to be a very common misspelling : https://hn.algolia.com/?q=Etherium

Re: Report on Stablecoins [pdf]

#485

Post by jdkee »

TylerE wrote: post #429
dragontamer wrote: post #244

Earlier quoted context omitted.

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.

Correct. They are doing share buybacks instead.

https://www.marketwatch.com/story/companies-on-pace-to-penci...

Re: Report on Stablecoins [pdf]

#486

Post by gpsx »

arcticbull wrote: post #278
caf wrote: post #248

Earlier quoted context omitted.

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 gol…

I think you are a little unfair in your comparison of bitcoin and gold. Gold has advantages over bitcoin, but bitcoin also has advantages over gold. Storing gold is more expensive then storing bitcoin. Transacting gold is much more difficult than transacting bitcoin. One of the downsides of bitcoin is that it could go to zero for some reason. I think gold has less of a risk of that, but other investments have a significant risk of going to zero.

I am not sure I understand the negative sum game you mention. The first payment miners get is (I don't know the proper name) a bounty, which is equivalent to a gold miner obtaining gold. This can be seen as a built-in inflation, which not only gold but also any fiat currency has. The difference is there is no known limit on this inflation factor for gold or fiat currencies. For gold we assume some gargantuan deposit will not be found and that it will maintain its scarcity. I don't think anyone thinks there is an inflation limit for the US dollar or any other fiat currency. Bitcoin has a known amount limit. (As a disclosure, I own gold, bitcoin, and US dollars.)

The other part of what miners make is a transaction payment. That exists in every other payment system I assume, except I guess physically handing an object to another person, which covers a pretty small fraction of transactions.

Re: Report on Stablecoins [pdf]

#487

Post by arcticbull »

RustyConsul wrote: post #459
arcticbull wrote: post #369

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…

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…

I love discussing both this topic specifically, and all sorts of things I have a strong opinion on with folks who disagree. I'm always open to being wrong; I've added The Sovereign Individual to my Kindle library and my reading list. Hope you have a great evening. Enjoyed the back-and-forth as well.

Re: Report on Stablecoins [pdf]

#488

Post by paulgb »

panarky wrote: post #479
tuesdayrain wrote: post #434

Earlier quoted context omitted.

>I’ve been shorting a few bitcoin-related public companies on the theory that in a run on Tether they will have to liquidate large bitcoin holdings I doubt a run on tether would even cause a 50% drop in BTC price. Hope your account doesn't blow up when Bitcoin inevitably reaches 1 million per coin ;)

Either markets work or they don't. Sure, in the short term, unregulated markets can be manipulated. But Tether's been around more than seven years, more than enough time for the "smart money" to profit by obliterating them. You can sell Tether on Coinbase for U.S. Dollar deposits to your bank account. The fact that Tether maintains its 1:1 peg to the dollar is a signal that maybe all the smart guys who have been conf…

> But Tether's been around more than seven years, more than enough time for the "smart money" to profit by obliterating them.

How would the smart money profit from obliterating them? If you’re referring to a Soros/GBP style trade, how would one borrow enough USDT to pull it off?

Re: Report on Stablecoins [pdf]

#489

Post by fiter »

RustyConsul wrote: post #418
foxylad wrote: post #359

Earlier quoted context omitted.

> When i pay in the current financial system I am giving you every bit of information to rob me blind and hoping you don't take it all. I don't understand this. You're saying if I send you $0.01 via internet banking, you can somehow take everything in the account? It doesn't work this way in NZ, where it is common to put your bank account details on invoices so people can pay you directly.

When i pay for something online, I am giving away my credit card/ debit card/ ACH information away for them to subtract the total amount of my transaction (Or debit it). I am trusting that outside entity in a number of different ways; To only take the required amount, b.) encrypt my information to prevent my information from leaking. Credit card data is leaked regularly in mass uploads for pennys on the dollar. Credi…

This sounds like a check that's signed electronically rather than physically.

I think another thing to note is that the other party is ASKING your bank/credit issuer to debit. The transaction can be stopped if not approved.

Normally I see the argument for crypto being that this helps merchants by avoiding charge backs, etc.

Re: Report on Stablecoins [pdf]

#490

Post by michaelmrose »

krick wrote: post #450
roywiggins wrote: post #398

Earlier 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…

> Oh, I understand why it hasn't collapsed already. I feel stupid, but I still actually don't. If considerably more people will want to sell it than there is a demand for it, the price will have to go down, no matter what, as long as "price" is anything more than a decorative label on the exchange's website and you actually can swap it for any currency at all. So, either the exchange should cover all that demand, whi…

If I understand correctly nobody has a useful handle to profit from killing it and all the players have an incentive in it's continued existence. Killing it would require large scale collaboration among individuals who collectively would all be hurt.
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