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Coinbase is launching support for the USDC stablecoin
331–340 of 388 posts
Re: Coinbase is launching support for the USDC stablecoin
#332Stablecoins seem like they would achieve most of the goals of the original cryptocurrencies such as Bitcoin: - Decentralized transactions - 24/7 access - Low fees - Store of value I suppose the only drawback here is that they're issued from a centralized authority. That said, for practical purposes the vast majority of Bitcoin holders didn't mine their own coins either. Despite this, no one on Twitter[1] seemed excit…
The difference in between the two is a matter of trust. Maintaining a 1:1 peg with the USD requires that users trust that the dollar reserves actually exist. Presumably, Coinbase will be seen by many as a more trusted 3rd party than Tether.
Stable coins exist to solve the problem of moving money in and out of cryptocurrency introduced by KYC/AML. Bitcoin represents an attempt to create a system of censorship resistant transactions with an absolute minimum amount of counter-party risk. Outside of the open cryptocurrency context, its unclear if something like stable coins would be allowed to exist. Certainly when you go back in history and look at things like ecash or the liberty dollar the answer seems to be no.
Re: Coinbase is launching support for the USDC stablecoin
#333Earlier quoted context omitted.
I can definitely see the attraction for entrepreneurs, just not the value for anyone else.
It's a form of time-arbitrage. The cost of regulation is a decrease in both convenience and innovation. By eliminating regulation, you get a whole host of new startups that were previously held back, some of which solve genuine problems that have no existing solution. Consumers flock to these startups because right now, in this moment , they solve problems better and are more responsive to customers than the existing…
People knew in 1997 that Amazon was going for monopoly and was just going to jack up prices when they achieved it
Is that really the story of the past 21 years though? Instead it seems like Amazon has still not achieved monopoly in retail, and they still aren't getting amazing margins from it.
Re: Coinbase is launching support for the USDC stablecoin
#334Earlier quoted context omitted.
Another key drawback of USDC is that your account can be frozen by the centralized authority: USDC tokens are ERC-20 compatible and can be used with any ERC-20 compatible digital wallet. However, a global blacklist is maintained by CENTRE for USDC, which prevents tokens from being sent into or from blacklisted addresses. Reasons for blacklisting could include known fraudulent or illegal activity, or a legal order or…
I don't see how this won't result in rebuilding the current regulated banking system on top of an inefficient system bottlenecked by proof-of-work.
If Ethereum successfully migrates to proof-of-stake then it won't be bottlenecked by proof-of-work any more ;-)
It may end up rebuilding the current regulated banking system. But if the regulated banking system and the unregulated banking system are sitting next to each other using tokens that are interchangeable with smart contracts, that seems like it could be useful.
Re: Coinbase is launching support for the USDC stablecoin
#335It is obscenely disingenuous, almost fraud, to put "USD" in the name of the coin. That's not what it is. The ability to convert to/from the coin is entirely based on the good graces of the issuer, and any regulators in the relevant jurisdiction(s). People see "USD" and think it's a dollar. Stablecoin authors know this. Unlike more seedy exchanges, Coinbase is based in a state with useful regulators (in this case, the…
The "dollars" in my bank account are not dollars either; they are something like a WellsFargoCoin. (Granted, there's a huge difference, since WellsFargoCoin is backed by the FDIC... (Edit: maybe there is not so much of a difference; see the reply by omarchowdhury. I really don't know.))
>is backed by the FDIC
Isn't FDIC backing capped?
Re: Coinbase is launching support for the USDC stablecoin
#336Earlier quoted context omitted.
I don't see how this won't result in rebuilding the current regulated banking system on top of an inefficient system bottlenecked by proof-of-work.
If Ethereum successfully migrates to proof-of-stake then it won't be bottlenecked by proof-of-work any more ;-) It may end up rebuilding the current regulated banking system. But if the regulated banking system and the unregulated banking system are sitting next to each other using tokens that are interchangeable with smart contracts, that seems like it could be useful.
If a regulated banking system mixes with an unregulated banking system everything becomes an unregulated banking system.
Also proof-of-stake has been promised for so long I would be embarrassed to talk about it if I worked at the Ethereum Foundation. Delivering things that work isn't their strong suit.
Re: Coinbase is launching support for the USDC stablecoin
#337Earlier quoted context omitted.
The tokens only have value as long as your tokens are redeemable. Multiple things can make them non-redeemable: * Your tokens can be tainted, for instance because they were once owned by a blacklisted address. The value of your tokens will be effectively 0. * The issuer might run a fractional reserve (this is the accusation against Tether, the most popular stablecoin at the moment) * The asset backing the stablecoin…
> The issuer might run a fractional reserve (this is the accusation against Tether, the most popular stablecoin at the moment) Very important to note - a stablecoin running a "fractional reserve" in the way that people talk about would just be fraudulent/insolvent. Modern banks have actually never operated under the "fractional reserve" model as described in economics textbooks, but it's true that they only a fractio…
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Re: Coinbase is launching support for the USDC stablecoin
#338Long list of problems with stablecoins, but a very big one is the backing itself.
To name a few of the problems this will mechanically bring about:
1) counter-party risk: that money will need to be stored at some institution. However small, custody carries a risk, which means the peg will drift.
2)Even assuming the audit mechanism is bulletproof (unlikely) and the custodians risk is spread on a 1000 different institutions ... what are you going to do with that huge stash of backing USD sitting idle in your coinbase/circle bank accounts? How long do you think it's going to take for someone to realize that the money can be "put to work"? Or that actually holding the full amount is a very unnecesary thing to do. Or that banks hate carrying huge idle USD deposits and will likely try to charge you for it?
There goes the peg.
Unless of course, like Tether did get away with for quite a long time, you're smart enough to let the world behave you actually have the USD backing the coin.
Re: Coinbase is launching support for the USDC stablecoin
#339Earlier quoted context omitted.
Currency debasement.
Inflation is a desirable feature in a currency. A currency should be a medium of exchange. Deflation encourages people to hold currency rather than exchange it.
I don't find it at all desirable that some people have the right to devalue my holdings. It is farcical to think that people would hold the medium of exchange forever if it kept increasing in value because at some point they would either have so much that they would prefer to convert (some of) it into material wealth or chase something with a higher rate of return. Alternatively they would have so little that they would have no choice but to convert it to survive. You cannot eat the medium of exchange.
Re: Coinbase is launching support for the USDC stablecoin
#340Earlier quoted context omitted.
Store of value? Not necessarily. stable coins pegged to an inflationary asset like the dollar will not preserve your value. You need a stable coin pegged to something like gold or bitcoin. Edit: curious, why downvotes? Was just pointing out a technical mistake...
The downvotes are because you're being pedantic. Most of the world uses USD or currencies easily exchangeable with USD. Therefore USD is stable. I cannot buy a car with a gold bar. They would laugh me out of the dealership and I'd have to sell the bar for USD. People want cryptocurrencies they can hold for more than two days that won't lose 50% of their value. The value here is ability to conduct transactions, not ne…
Yeah, but the point of "storing value" is storing the purchasing power of a dollar today for future purchasing. You don't do that by saving the dollar, you do it by investing it or by buying something whose value will hold with time.