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Report on Stablecoins [pdf]

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Re: Report on Stablecoins [pdf]

#291

Post by stickfigure »

arcticbull wrote: post #270
anonporridge wrote: post #251

Earlier quoted context omitted.

Yes, the USD is backed by the most absurd proof of violence the world has ever seen. No organization of human civilization has ever been able to summon as much death and despair as the United States. However, most of the ability of the United States to execute such power is centralized in Washington D.C. and New England. Centralization brings immense efficiency, but also vulnerability. Those geographic regions are a…

> Yes, the USD is backed by the most absurd proof of violence the world has ever seen. No organization of human civilization has ever been able to summon as much death and despair as the United States. That has nothing to do with the currency. I'm not saying its good, or bad, I'm saying you've stapled together two unrelated concepts. The US army is a small fraction of GDP and exists to support the defense of the US a…

Without the aircraft carriers, any mildly malevolent nation could print dollars. Some already try. There's no question that a large military is necessary to preserve USD as a world currency.

You can't ignore this cost. Maybe the US would cut military spending, maybe not, but as long as it wants USD to be the coin of the realm, there's no choice in the matter.

Re: Report on Stablecoins [pdf]

#292

Post by giaour »

robocat wrote: post #271
wpietri wrote: post #111

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…

> imagine investing in, say, a new fast-food franchise joint Let us imagine instead that you want to invest in Burger King. You buy some shares in Restaurant Brands International (QSR). When you own those shares, what does that actually mean - how is that connected to the purchase of burgers? I think share ownership is often a better metaphor for many cryptocurrencies than fiat currency. Especially when considering s…

As an unaccredited investor, your investment funds can only be accepted by publicly traded corporations (with all the legal protections and reporting requirements that entails). Investing in GameStop is definitely riskier than putting your money in a savings account, but fraud is substantially easier in a totally anonymous and unregulated market like the crypto sector.

I mean, just think about how hard the Enron execs had to work to defraud their investors! They had to come up with a novel scheme to hide losses, collude with their accountants to avoid detection, and some of them even had to spend some time in prison. Yesterday, I read about an NFT scam where the anonymous developer just transferred funds to his personal wallet and then disappeared.

Re: Report on Stablecoins [pdf]

#293

Post by arcticbull »

RustyConsul wrote: post #279
arcticbull wrote: post #264

Earlier quoted context omitted.

> 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…

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 regulatory arbitrage, someone could just do that in the traditional economy without crypto.

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. Although they always end up the same way: at best what you started with. To me this falls squarely under Spolsky's "things you should never do." [1]

There hasn't been a single actual competitive business built on top of crypto in fourteen years. That's because they're all hamstrung by the massive inefficiencies they boat-anchor to their solutions. Decentralization and trustlessness and permissionlessness don't matter at all to 99.9% of humans. Attempting to offer these is incredibly inefficient and makes it totally uncompetitive with centralized solutions for every legal use case.

I would argue it fails Occam's razor to try and add miners to a monetary system.

The simplest, most efficient, most economical solution to moving value around is centralization. If there's a better way to solve any of the given problems with crypto, there's an easy way to optimize it further: get rid of crypto.

[1] https://www.joelonsoftware.com/2000/04/06/things-you-should-...

Re: Report on Stablecoins [pdf]

#294

Post by sub7 »

liquidise wrote: post #215
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.

> 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.

Re: Report on Stablecoins [pdf]

#295

Post by WhisperingShiba »

mailbag wrote: post #85
okareaman wrote: post #64

Historically, we've had major bubbles and crashes in all kinds of financial markets, from stocks and bonds, to property and dotcom stocks. Is there any reason to believe that cryptocurrency is more stable and we won't have a catastrophic crash?

Arguably, we've already seen multiple catastrophic crashes in cryptocurrencies.

Brother, you simply don't understand. A 50% swing in a day is just volatility.

Re: Report on Stablecoins [pdf]

#296

Post by [deleted] »

Tenoke wrote: post #273
BoiledCabbage wrote: post #257

Earlier quoted context omitted.

While I assume I know what you did, rather than go with that, describe how you cashed out and I'll explain how I believe that supports why it's ultimately a scam.

By selling it for fiat on an exchange and then sending that to my bank account. Same way I'd cash out shares. Whatever your beliefs about it's support, it's not comparable to Squid Game which you literally couldn't sell from the start. And to be frank, if you are exaggerating that much I'm less inclined to believe you are evaluating it honestly .

[deleted]

Re: Report on Stablecoins [pdf]

#297

Post by sanderjd »

lvl100 wrote: post #217
spir wrote: post #202

Earlier quoted context omitted.

I'm with you, where are the actual applications? I'd say this criticism was mostly fair up until about two years ago. Within the last two years, the actual applications have flourished. For example, have a look through this list https://defipulse.com/ If you remain skeptical, that's fair. The good news is, Ethereum is reaching adulthood this year by switching to proof of stake and launching the web of layer-2 network…

This is just pathetic.

Which part? Could you say more? If you make a comment like this, I feel like it should be obvious what you mean, but it isn't at all obvious to me in this case.

Re: Report on Stablecoins [pdf]

#298

Post by lentil_soup »

icelancer wrote: post #253
TomSwirly wrote: post #194

Earlier quoted context omitted.

> 100x better than existing solutions. And after ten years, there isn't one actual application of cryptocurrencies except for speculation and crime.

I've responded to several commenters who say this with my real world examples, the most notable of which are paying people in Venezuela to do work for me when most mainstream forms of monetary exchange are nearly impossible in/out of that country.

Venezuelan here. You're exaggerating the use of bitcoin in Venezuela. You might have paid some people with it but on the streets you use and want USD. Zelle, PayPal or USD in cash. No one wants another volatile currency, we've had enough of those.

Re: Report on Stablecoins [pdf]

#299

Post by sanderjd »

lvl100 wrote: post #249
spir wrote: post #226

Earlier quoted context omitted.

There's a large subset of the talented people on HN that were wrong about crypto years ago-- they couldn't see that the casino and the innovation are, unfortunately, inseparable-- and many now cling to their original incorrect points of view, even as crypto is clearly changing the world like the internet did in the 90s and mobile in the 00s. I have been full-time in crypto for years. I could write you a 10,000-word e…

It’s pathetic because you’re just writing nonsense and can’t even describe anything practically productive about crypto. None. By the way, I could ALSO write you 10,000 word salad about how commonly found stones can solve the wrongs in modern finance. That doesn’t say anything about common stones. It just says modern finance is FLAWED.

You are not showing yourself to be a person that it is worthwhile for this person to waste time on. There are other people in this thread with your point of view but who are commenting in good faith, rather than in bad faith like you are.

Re: Report on Stablecoins [pdf]

#300

Post by roywiggins »

arcticbull wrote: post #290
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…

> 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…

I don't get it. If everyone starts selling their Tether (because they're afraid of it not being able to maintain the peg), even if they can't sell the Tether back to the company, won't that crater the Tether price- possibly to zero- effectively killing the currency?

Like, this happens with currencies that are pegged to the dollar. The government that's supposed to be maintaining the peg starts to run out of dollars and starts limiting dollar redemptions. People turn to the black market to obtain dollars. The price of a dollar (in that currency) goes up. The value of the currency (again in dollars) drops. Now the peg is broken.

Tether the company could walk into the sunset with whatever they're holding- they can just honor "friends and family" withdrawals, but that doesn't prevent the coin going to zero for everyone else. It actually makes it even worse for the currency: suppose it's collateralized at 50%. Tether could honor withdrawals at 50 cents on the dollar, force every holder to take a 50% haircut. The price might settle to something less than $1 but more than $0 and continue on.

But if they abscond with the money instead, the currency will have even more reason to drop to nil.

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