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Can stablecoins live up to their name?
- adamnemecek 8y agoCrypto currencies have created something called triple entry accounting. Double entry accounting, invented in Florence in 1300’s has enabled debt which is the reason the city flourished. I wonder what does triple accounting enable?
- therein 8y agoCan you elaborate? How did they allow that? What is triple entry accounting?
- adamnemecek 8y agoBlockchain is triple entry accounting. You have anount, parties, and proof.
- therein 8y agoOkay so the entire ownership/txn history of that asset itself is accounted for, and that's what's triple entry accounting is. Got it.
- MR4D 8y agoCan you elaborate on how double entry accounting enabled debt? Debt existed way before Pacioli invented (borrowed?) double entry accounting. For instance, in the Bible, Proverbs 22:7 - “The rich rule over the poor, and the borrower is slave to the lender.”
- pdkl95 8y agoDebt existed several thousand years before money was invented[1]. Regarding the bible's many references to debt: note that it doesn't talk about inventing debt. The concept of debt - and the problems it creates - were already commonplace enough that for priests to add social commentary about debt into religious texts. Predating the book of Proverbs by ~700 years, Leviticus 25:8-13 discuses the concept of a "Jubilee" every 50 years where slaves/prisoners were freed and debts were forgiven. Double entry bookkeeping was a great idea that expanded many aspects of business and finance because it was a type of error detection for complex accounts that could be done - in the era before calculating machines - by hand using only addition. [1] See David Graeber's writings/talk for a good overview of the ancient history of debt and the invention of early forms of money from the need to standardize debts/payments/etc.
- anonytrary 8y agoThe title is clickbait. TLDR: Gotchya! This is a Stablecoin 101 article. Stablecoins on an exchange are pegged to a certain value via algorithms and you park your money there temporarily so you don't have to cash out in fiat in order to avoid volatility. Some stablecoins are known to have lost their peg, so be careful.
- ioniosdaionio 8y agoThey don't all work the same way. Some, like Tether, claim to be fully backed by USD. But it's similarly unstable and is spectacularly shady.
- h1d 8y agoThe smoke is already going up when, right now Tether has been at a value of $0.95 for more than a week and Bitfinex who is likely to be behind the Tether corp has its Bitcoin price above 5% above market average. Reminds me of MtGox when it its price was going off the rest of the market until collapsed.
- dang 8y agoOK, we'll switch to the subtitle. Just please don't Betteridge it.
- rlucas 8y agoIn a word, no. To have a usable, stable exchange rate into something (other than a related cryptocurrency), there must be another party who stands willing to buy and sell the thing at that pegged rate. Read up on the history of currency pegs. Generally speaking, even with the best efforts of nation-states with millions of citizens, actual gold mines, and literal armies, maintaining a peg is a fool's errand.
- londons_explore 8y ago> there must be another party who stands willing to buy and sell the thing at that pegged rate. Most stable coins claim there is. For example, Tether claims that they hold equal US dollars for Tethers issued. If true, they would be in a position to be able to buy or sell at the pegged rate and never run out of either dollars or Tethers (since they can be manufactured).