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Report on Stablecoins [pdf]

home.treasury.gov

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Re: Report on Stablecoins [pdf]

#571

Post by graeme »

oarabbus_ wrote: post #495
kirse wrote: 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…

>That same thing will happen if crypto has a major run. The exchanges already conveniently "go down" when Bitcoin dumps even now To this point specifically: is there any proof this is malicious? Amazon, Facebook, Google have all had outages before; shouldn't we apply Hanlon's Razor when a cryptocurrency exchange fails to serve requests during a massive traffic spike?

The exchanges never go down when the crypto price rises, only when it falls.

Further, an honest exchange makes money on people’s trades. Going down when volume is high means giving up peak profits. Equivalent of amazon reliably going down on black friday.

Re: Report on Stablecoins [pdf]

#572

Post by graeme »

tylerrobinson wrote: post #499
michaelmrose wrote: post #490

Earlier quoted context omitted.

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.

> all the players have an incentive in it's continued existence Even retail investors? Why do they hold a stablecoin that has any risk at all, with no upside? What is the retail investor’s end game here?

Large yields on stablecoins, inability to bank on KYC exchanges, desire to gamble on leveraged exchanges like Binance.

In each case no one believes it will collapse while they hold.

Re: Report on Stablecoins [pdf]

#573

Post by darcys22 »

thehappypm wrote: post #355
hjorthjort wrote: post #353

Earlier quoted context omitted.

Not really. The point is: there's always someone who has a debt in DAI they need to pay off. If they thought the dip would go even further , they would wait longer, because to them, the DAI does have value: it is what they need to get their hands on to get their collateral back.

What if they think DAI is going to go to $0?

Then they would be able to get their ethereum collateral back for free

Re: Report on Stablecoins [pdf]

#574

Post by graeme »

AnthonyMouse wrote: post #345
arcticbull wrote: post #293

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…

> If there was a way to make them more efficient that did not involve throwing risk models out the window or regulatory arbitrage, someone could just do that in the traditional economy without crypto. This is assuming there is no value in regulatory arbitrage, which is wrong. The value of this is proportional to the dysfunction of the existing system in any given country. In countries that impose currency exchange li…

You’re shifting the argument, which was about financial institutions in functional markets.

Re: Report on Stablecoins [pdf]

#575

Post by delaaxe »

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…

Wait till DAI gets backed by real estate bonds.

Re: Report on Stablecoins [pdf]

#576

Post by headsoup »

bedobi wrote: post #444
arcticbull wrote: post #396

Earlier quoted context omitted.

> ... 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. Just to be clear, my point was that the classical definition of a "store of value" isn't something that goes up exponentially and flails around wildly at the whims of folks trying to liquidate leveraged positions. It's broadly regarded as something you can purchase a…

> literally every frothing at the mouth holder of crypto will allege it for you, as they are incentivized to do. Bring in more people, you get wealthier. Sound familiar? It's a decentralized MLM. Just because idiots abuse cryptos for baseless manias doesn't make the underlying technology or idea or thing bad, nor a pyramid scheme or an MLM. You could say the same thing about property, art, vintage cars, any number of…

You haven't actually provided any evidence in any of your responses, just arguments and hypotheticals.

Re: Report on Stablecoins [pdf]

#577

Post by graeme »

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…

Is there any short form version of something someone can read to get a sense of the value you’re seeing? I followed this conversation with interest, but still find myself unenlightened as to what there is I haven’t understood yet about the space. Whenever I talk to a proponent it seems very theoretical.

There are often analogies to the early internet, but I was alive then and remember some of the early, tangible use cases which had me hooked:

* You can look at Nintendo’s website. It has information about games, which you are currently getting from magazines (my first exposure)

* You can buy books you can’t buy locally (Amazon)

* You can mail a friend from another location, for free (hotmail, gmail)

* You can call a friend in another country, for free (skype)

* You can call a phone in another country, for cheap (skype)

What are some crypto equivalents, today, that would convince someone who is not already invested in crypto that they need to get into crypto to use it?

E.g. saying “you can get a loan of 66% of your Bitcoin holdings!” is a use case for people already in crypto.

I would also exclude stablecoin yields because the risks there are massive, and there exist plenty of investments with high risk and high return in normal land.

Re: Report on Stablecoins [pdf]

#578

Post by graeme »

swader999 wrote: post #547
wpietri wrote: post #451

Earlier quoted context omitted.

> 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 ad…

All reasonable criticisms. But it is very early still and you won't see many transactions for exchange of goods this early in its adoption. That's not to say that BTC will eventually take over, it's just to say that the kinds of uses you see this early aren't predictive of its future.

There are fewer btc transaction opportunities now as transaction costs have gone up.

Re: Report on Stablecoins [pdf]

#579

Post by [deleted] »

webinvest wrote: post #183
sub7 wrote: 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.

No there won’t be a big long term correction from Tether because there are dozens of other stable coins now for people to temporarily sell into. There’s also the ability to short crypto and buy puts on crypto. All of that provides ways for speculators, investors, middle class savers, and early technology adopters to stay in the game. You’re like a doomsday predictor that will never see a doomsday happen. No real valu…

[deleted]

Re: Report on Stablecoins [pdf]

#580

Post by mrep »

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…

My citi card offers virtual 1 time use numbers [0] and comes with all the normal benefits that you get from credit cards.

Also, you are trusting that the person you are sending money to honors their agreement as there is no intermediary to dispute transactional claims.

[0]: https://www.cardbenefits.citi.com/Products/Virtual-Account-N...

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