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I'm a big advocate of cryptocurrency but am unconvinced that stable value coins can work. The Sai was recently released: https://blog.makerdao.com/2017/06/05/i

I'm a big advocate of cryptocurrency but am unconvinced that stable value coins can work. The Sai was recently released: https://blog.makerdao.com/2017/06/05/introducing-sai/ https://blog.makerdao.com/2017/06/05/introducing-sai/ and BitUSD has been out for years: https://bitshares.org/technology/price-stable-cryptocurrencies/ https://bitshares.org/technology/price-stable-cryptocurrenci... but neither have a significant amount of value riding on them and I personally wouldn't trust them with significant value. The problem with any stable value coin is that its stability depends on the underlying cryptocurrency collateral. As long as the value of cryptocurrencies is significantly more volatile than that of fiat, I wouldn't trust a stable value coin's ability to remain solvent and maintain its peg. I would rather bear the greater volatility of holding the underlying cryptocurrency, and get to enjoy the upside potential, than hold a stable value coin that has no potential to appreciate and a greater than zero probability of going to zero. When cryptocurrencies get stable enough to make good collateral for stable value coins, they will be stable enough to use directly as a low-risk store of value. The one wildcard in my estimation is decentralized options and futures markets. By creating a market for volatility hedging, it might make it possible for parties to 'buy' the requisite stability for a price.

mbrock 9y ago
I would rather bear the greater volatility of holding the underlying cryptocurrency, and get to enjoy the upside potential, than hold a stable value coin that has no potential to appreciate and a greater than zero probability of going to zero. That's about what kind of risks and rewards you want for your investments or savings. If you consider the unit of account for a debt, it seems unlikely that you'll have the same preference. If a trustworthy stablecoin arrives, you will probably want to collateralize some of your other assets to lend stablecoin just to participate in trades and contracts. Most people don't want stuff to be priced in a volatile unit. Of course I have to believe this because I do some work on Maker! By the way, Maker's idea of a stablecoin (the dai, the planned successor to sai) isn't pegged. The dai value floats on exchanges while the issuance system reacts to the market prices and tweaks its own parameters to incentivize medium term stability. In the longer term, the stablecoin might be somewhat deflationary or inflationary even compared to its own stability anchor (the SDR currency basket).
- DennisP 9y ago
  What's the best introduction to the Maker system? Something that explains clearly how the current design works.
  - mbrock 9y ago
    A pretty good introduction would be the three videos linked on https://makerdao.com/ https://makerdao.com/ (overview, how dai works, and how MKR works). The current revision of the white paper should lay out the motivation and mechanics of the system without being too verbose: https://github.com/makerdao/docs/blob/master/Dai.md https://github.com/makerdao/docs/blob/master/Dai.md If there's something about it that doesn't make sense to you or seems poorly explained, let me know, or you can join the chat/subreddit to discuss.
- CryptoPunk 9y ago
  >>That's about what kind of risks and rewards you want for your investments or savings. True, if I were a retailer and not looking to invest long-term in cryptocurrency for example, I might prefer to receive a stable coin rather than a cryptocurrency, and then eventually liquidate it for fiat it or exchange it for goods/services. >>If a trustworthy stablecoin arrives, you will probably want to collateralize some of your other assets to lend stablecoin just to participate in trades and contracts. That's true, but that's a big 'if' in my opinion.
CloudYeller 9y ago
For anyone saying that, in spite of digital currencies being poor candidates for replacing fiat, they're still legit "stores of value", I have an alternative "store of value" that is also guaranteed to never inflate its supply. It's called: me! There is only one of me, forever! The supply of me will eventually go to zero! Get in now- only $4999.95 for one 1/1000th share of me! Want to trade shares of me? Just use craigslist. I'm sure I'll be on Poloniex soon. I hear there's a double bottom pattern so get in now! Don't like me? Well I also hand-made a copper wire sculpture! It's truly one of a kind and guaranteed to last forever! A 1/1000th share of my sculpture is $15,000 though because it'll make you feel sophisticated and artistic (I'm more of a lowbrow investment myself)

mbrock 9y ago

I would rather bear the greater volatility of holding the underlying cryptocurrency, and get to enjoy the upside potential, than hold a stable value coin that has no potential to appreciate and a greater than zero probability of going to zero. That's about what kind of risks and rewards you want for your investments or savings. If you consider the unit of account for a debt, it seems unlikely that you'll have the same preference. If a trustworthy stablecoin arrives, you will probably want to collateralize some of your other assets to lend stablecoin just to participate in trades and contracts. Most people don't want stuff to be priced in a volatile unit. Of course I have to believe this because I do some work on Maker! By the way, Maker's idea of a stablecoin (the dai, the planned successor to sai) isn't pegged. The dai value floats on exchanges while the issuance system reacts to the market prices and tweaks its own parameters to incentivize medium term stability. In the longer term, the stablecoin might be somewhat deflationary or inflationary even compared to its own stability anchor (the SDR currency basket).

DennisP 9y ago
What's the best introduction to the Maker system? Something that explains clearly how the current design works.
- mbrock 9y ago
  A pretty good introduction would be the three videos linked on https://makerdao.com/ https://makerdao.com/ (overview, how dai works, and how MKR works). The current revision of the white paper should lay out the motivation and mechanics of the system without being too verbose: https://github.com/makerdao/docs/blob/master/Dai.md https://github.com/makerdao/docs/blob/master/Dai.md If there's something about it that doesn't make sense to you or seems poorly explained, let me know, or you can join the chat/subreddit to discuss.
CryptoPunk 9y ago
>>That's about what kind of risks and rewards you want for your investments or savings. True, if I were a retailer and not looking to invest long-term in cryptocurrency for example, I might prefer to receive a stable coin rather than a cryptocurrency, and then eventually liquidate it for fiat it or exchange it for goods/services. >>If a trustworthy stablecoin arrives, you will probably want to collateralize some of your other assets to lend stablecoin just to participate in trades and contracts. That's true, but that's a big 'if' in my opinion.

CloudYeller 9y ago

For anyone saying that, in spite of digital currencies being poor candidates for replacing fiat, they're still legit "stores of value", I have an alternative "store of value" that is also guaranteed to never inflate its supply. It's called: me! There is only one of me, forever! The supply of me will eventually go to zero! Get in now- only $4999.95 for one 1/1000th share of me! Want to trade shares of me? Just use craigslist. I'm sure I'll be on Poloniex soon. I hear there's a double bottom pattern so get in now! Don't like me? Well I also hand-made a copper wire sculpture! It's truly one of a kind and guaranteed to last forever! A 1/1000th share of my sculpture is $15,000 though because it'll make you feel sophisticated and artistic (I'm more of a lowbrow investment myself)