Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Report on Stablecoins [pdf]

home.treasury.gov

Post reply on HN
Print view View original

651–660 of 697 posts

Re: Report on Stablecoins [pdf]

#651

Post by cinquemb »

the_optimist wrote: post #650
cinquemb wrote: post #71

Earlier quoted context omitted.

> A non-bank does not have the ability to create bank loans. A decentralized derivatives protocol can lend its credit balance (and fractions of its stablecoin balance, if it exists at all at the point when a position is opened) to a decentralized liquidity pool when there is demand by end users to open a position (ex. a user can deposit frax to buy options/forwards/interest rate swaps/etc against a liquidity pool whi…

This sounds like credit, but not credit origination. If new units of the numeraire are created, that is origination akin to a bank loan. If not, that is not origination. I don't know of an English term that describes 'not originated' lending, as everyone sees to use the term 'lending' for both behaviors. What do you mean by 'borrow collateral into existence'?

> This sounds like credit, but not credit origination. If new units of the numeraire are created, that is origination akin to a bank loan.

New units of stablecoins are being created out of thin air, but the catch is that they can only be used on the exchange (technically, it could be spent else where if other contracts wanted to use it), and if there is a shortage of actual stablecoins when someone tries to withdraw their credit balance, they will receive debt tokens that are redeemable from the exchange for stablecoins at an interest (collateral requirements will be raised for all actors if credit balance > stablecoin balance, and lowered when the opposite is the case).

> What do you mean by 'borrow collateral into existence'?

In this case, in order for the credit balance for an address to increase typically, a user will need to deposit stablecoins into the exchange and their credit balance gets incremented by the same amount (their credit balance is used to buy derivatives).

However, in the case where a liquidity pool is borrowing from the exchange, the credit balance is increased for the liquidity pool without stablecoins being deposited by the pool (typically a pool will need to have stablecoins deposited into it by liquidity providers in order for the credit balance of the pool to increase, the credit balance of the pool is used as collateral write/buy derivatives).

Re: Report on Stablecoins [pdf]

#652

Post by nybble41 »

mrep wrote: post #647
nybble41 wrote: post #640

Earlier quoted context omitted.

Mining rewards are not fees. They're the initial distribution mechanism (as a fairer alternative to pre-mining). The median transaction fees[0] which users actually pay are much lower: about 65¢ currently. With Lightning transactions they're negligible, potentially as low as 0.00000001 BTC (0.064¢). You can expect this to increase over time as the mining rewards drop, but there is no need to replace all the mining re…

Miners are incentivized to keep adding hardware/electricity until total cost = revenue. To pay their bills, they have to sell their new bitcoin to people which is effectively like a fee as their selling of 21 billion dollars in new bitcoin supply to pay their bills reduces the price of bitcoin acting like a fee on buying it.

> To pay their bills, they have to sell their new bitcoin to people which is effectively like a fee …

No, that's nothing like a transaction fee. The person submitting transactions to the network doesn't pay the seigniorage for minting new bitcoins. There is inflation due to the mining rewards (currently less than 2% annually, and set to decrease over time) which places some slight downward pressure on prices. That inflation is a cost for those holding bitcoin, not those spending it—not that anyone would notice it given the way the price has appreciated.

Re: Report on Stablecoins [pdf]

#653

Post by wpietri »

Animats wrote: post #529
wpietri wrote: post #435

Earlier quoted context omitted.

This is like arguing that the Beanie Baby market will never die. It's precisely the belief that the bubble will be eternal that helps inflate the bubble. For those unfamiliar, Beanie Babies were a collectible toy that had a multi-year fad in the 1990s, with 5-dollar toys trading for thousands: https://www.ft.com/content/1563d643-332f-3887-8c6e-caf7435f3... It's true that the Beanie Baby market never totally went away…

The Beanie Baby market on eBay is useful to study because it shows much the same behavior as NFTs. Beanie Babies are non-fungible - each one is different. So there's no "market price", just lots of individual offers. On eBay, you'll see asking prices around $5000. But if you look at completed transaction info, prices are around $50. That's what an illiquid market looks like. NFTs behave the same way - high asking pri…

Interesting! I see that there are grading/authentication services out there for Beanie Babies. That makes sense, as a lot of commodities have systems for taking unique objects and making them tradable. E.g., the CME wheat contract definition is extremely specific: https://www.cmegroup.com/content/dam/cmegroup/rulebook/CBOT/...

I wonder if we'll see things like that in the NFT market.

Re: Report on Stablecoins [pdf]

#654

Post by 22c »

challenger-derp wrote: post #646
paulgb wrote: post #420

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 and bring down the rest of the market. It’s not as direct, but I’m less worried about counterparty risk. I wrote up my thesis here: https://paulbutler.org/2021/betting-against-bitcoin/

Halving risks & information assymetry risks are pretty solid arguments for future headwinds faced by btc miners. Investopedia states that by August 2021, only 2.3M BTC out of the 21M cap remain to be mined ( https://www.investopedia.com/tech/what-happens-bitcoin-after... ). However, what is preventing a fork of bitcoin from addressing this?

You can fork BTC to do whatever you want, but it doesn't come with liquidity. In other words, a fork doesn't come with the same amount of inertia.

Re: Report on Stablecoins [pdf]

#655

Post by bedobi »

headsoup wrote: post #576
bedobi wrote: post #444

Earlier quoted context omitted.

> 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.

Wow. This is a HackerNews thread, not some academic panel.

The handle I'm responding to hasn't exactly provided "evidence" either, including for:

* the existence of nebulous things like "value stores", "intrinsic value" or what constitutes or possesses either

* that Bitcoin is a negative-sum asset, a MLM or a pyramid scheme

* that a distributed tamper proof ledger doesn't have any usefulness for any practical purpose

which is fine by me, we're all just here to kill time between builds and deploys anyway :P but if you think evidence is required knock yourself out and prove some for any of the above

Re: Report on Stablecoins [pdf]

#656

Post by sanderjd »

Igelau wrote: post #628
sanderjd wrote: post #493

Earlier quoted context omitted.

That is one kind of bad faith argument but there are others. In this case it is asserting that something is some adjective ("pathetic"), getting a response, and then just reasserting the same thing without responding to the response.

It was a bit brusque. I think that's the word you're looking for. If that's what bad faith means to you (which still seems a stretch of the definition so you can get the guidelines invoked and win the internet) then both sides of the discussion are guilty of this. On the other side of the aisle, we have people pointing out that there aren't any interesting dApps, with the reply being: "Sure there are! Here's a list d…

There's a difference between "pointing out that there aren't any interesting dApps" and saying "This is just pathetic". The former is a reasonable point to make while the latter is a bad faith insult.

Re: Report on Stablecoins [pdf]

#657

Post by humaniania »

arcticbull wrote: post #531
humaniania wrote: post #516

Earlier quoted context omitted.

Assuming that the unlicensed exchanges have the capital to process withdrawals. In other unregulated industries the people operating the gray market platforms are almost always embezzling money and not keeping customer funds in segregated accounts. If the exchanges spend money propping up Tether they won't have it available for withdrawals.

Exchanges make money hand over fist, they keep non-trivial basis points from a nice simple MySQL transaction. The question is: is the net outflow from the USDT peg into USD more than the revenue they are bringing in?

Yeah but they're operating in a gray market that is going to almost certainly close or shrink with regulation and they're greedy so why not take as much as possible? It's not like the customers have any recourse when their sketchy offshore exchange disappears or closes without paying everyone.

Re: Report on Stablecoins [pdf]

#658

Post by gpsx »

caf wrote: post #507
gpsx wrote: post #486

Earlier quoted context omitted.

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 signi…

AIUI, the negative-sum game breaks down like this: consider a black box around the entire bitcoin ecosystem. This black box is consuming $20B/year worth of real resources, which (given that you can't generally buy electricity or generation assets with bitcoin) means $20B/year is flowing out of it. Now to be sure there are some customers of the bitcoin system, using bitcoin as an intermediary to move money across bord…

You mentioned transaction fees, the other is "inflation" or mined coins. As mentioned above, this is the same as gold and many other things. I guess it is just a matter of definition if you want to say that is a negative sum game. It is not unique to bitcoin though.

Re: Report on Stablecoins [pdf]

#659

Post by jkhdigital »

mrep wrote: post #584
jkhdigital wrote: post #404

Earlier quoted context omitted.

> made it as energy inefficient as humanly possible in the case of PoW I'd encourage you to broaden your understanding of the purpose of PoW and specifically the energy used. The energy used is the cost of securing a PoW blockchain--quite literally, the cost of the energy used is what makes it difficult to mount a successful attack. It is simple and universally accessible. It is not "inefficient"; it is functioning e…

I mean, we can compare it to mastercard: 74 billion transactions a year for mastercard vs 100 million a year for bitcoin. Mastercard revenue is 15 billion while bitcoin has 21 billion in annual mining fees. So mastercard processes 740 times as many transactions for 70% of the cost and I would argue the real cost is the revenue - operating income for their actual expenses to operate which is 7 billion so 1/3 the cost.…

Bitcoin is like physically moving gold bullion between (anonymous) vaults. It is not appropriate to compare it to MasterCard, because it has dramatically different requirements and guarantees.

There may be some Bitcoiners who think it should be used for all payments, but I’m not one of them. Centralized payment processors will always be more efficient, especially for the massive flow of low-value casual transactions that the average consumer produces.

Re: Report on Stablecoins [pdf]

#660

Post by jkhdigital »

imtringued wrote: post #593
jkhdigital wrote: post #391

Earlier quoted context omitted.

> 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.

All humans enforce laws with physical interactions, especially violent ones. If you have no central governing body then every human makes their own rules and laws and when they enforce these rules they will be just as violent as the governments they wanted to run away from.

You should probably read some philosophy. There are much more sophisticated and nuanced ways of thinking about government and law than your comment seems to endorse.
Post reply on HN