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Why pegged to the dollar? Seems like a fatal flaw.
by dreamdu5t 9y ago
Why pegged to the dollar? Seems like a fatal flaw.
- cantrip 9y agoThe point is that it's stable relative to the most used and trusted currency on the planet.
- dreamdu5t 9y agoSo why not just hold dollars?
- vannevar 9y agoI assume for the usual reasons argued in favor of cryptocurrency: anonymity and decentralization. But the exchange rate and contraction/expansion algorithms presumably must be consensus. And the more heuristics you constrain the system with at the start, the greater the likelihood of forks down the road.
- cantrip 9y agoA "stablecoin" allows traders to move in and out of cryptocurrency positions to a stable currency quickly, without converting to true USD, which is slow to process. It also allows the transfer of stable value (payments, remittances) on the blockchain, rather than transferring volatile currencies and converting them to USD, incurring the risk of price fluctuation and conversion fees. A stable coin is a very valuable asset to the ecosystem.
- xwvvvvwx 9y agoJust as something very stable to bootstrap the network. The paper also talks about pegging to a basket of good (e.g. CPI) as the end state if it ever ends up superseding the dollar.