20 ms·

Coinbase is launching support for the USDC stablecoin

424 points by _nvs 8y ago

azinman2 8y ago
But if it’s pegged to the dollar, how do I speculate on it?!
- empath75 8y ago
  It makes it more useful for money laundering probably.
- ISL 8y ago
  Forex futures.
- jatsign 8y ago
  Buy ethereum. If this works, transmission would require ETH to be paid as gas.
seibelj 8y ago
Probably the first piece of the crypto ecosystem where being a trusted, regulated entity in a country with a real court system is an asset rather than a liability.
buildbuildbuild 8y ago
Excited to see a reputable company like Coinbase launch this. Hopefully with their reputation we can avoid another Tether situation. The US government should launch their own stablecoin. A digital US dollar is a national need that shouldn’t be managed by a corporation in my opinion.
- cheeseomlit 8y ago
  USD is already digital, the vast majority of dollars in circulation are not bills/coins
  - agorabinary 8y ago
    Can you withdraw your USD to a flash drive?
    - jf- 8y ago
      Would that be a good idea? Do you want your money to be in a state where it can very easily become unrecoverable?
      - donatj 8y ago
        Like cash?
        jf- 8y ago
        Hmm. So you can’t see any differences between a flash drive and cash? If you withdrew your life savings in cash, that cash couldn’t become corrupted, unless by physical damage. Your life savings in cash would also be large enough that you wouldn’t be likely to lose it, or have the container it sits in easily stolen or accidentally smashed. You also are not very likely to forget or misplace the password to your cash. Or, you could just use a credit card and have fraud protection.
        reidjs 8y ago
        If I had my life savings on a flash drive I think I could keep track of it pretty well. The nice thing about crypto wallets is you can replicate the secret key indefinitely. So, even if the drive is stolen you still have a password protected backup. If the cash is stolen, well, possession is 9/10s the law ;).
  - buildbuildbuild 8y ago
    Consumers currently cannot hold USD electronically without a bank.
    - 8y ago
- soared 8y ago
  Why does there need to be a digital US dollar? Almost 20% of the US is underbanked, and 6.5% is unbanked. A digital dollar seemingly would be even worse and work to concentrate wealth among the educated/wealthy. https://www.fdic.gov/householdsurvey/ https://www.fdic.gov/householdsurvey/
  - arcticbull 8y ago
    Many low income people have smartphones actually, and use them in lieu of desktops. Not being connected isn’t the reason they’re unbanked or underbanked, you could argue moving more to digital would include more of them. Plus the US dollar is already digital. In part they don’t have bank accounts because they’re poor, so they don’t have money to put in them. If they weren’t broke they’d have bank accounts. IMO this is more a function of wealth inequality in the US than of banking. Think about it, you’ve got $0. Now I give you a fee free bank account. You’ve still got $0. You’re no more included in the financial system.
    - soared 8y ago
      If they're already connected, why would moving digital include more of them in banking? They're not using physical banking now, I don't see how digital banking would convert them.
      - arcticbull 8y ago
        I meant having more ways to spend their money directly from their phones would allow them to avoid having to withdraw from physical ATMs, and more digital acceptance options means not having to deposit at ATMs. Those are kind of the last vestiges of the physical banking system. These problems are being solved though. Basically any time you’ve seen a “cash only” sign, it’s a blocker to totally digital banking. Low income folks get wrecked disproportionately by the high fees associated with physical retail banking (including ATMs). They charge flat fees (like Cryptos incidentally) which function as a regressive tax on the poor. Digital banking, by virtue of not having to deal with real estate and physical assets is more efficient and cheaper.
- billions 8y ago
  The government's "stable coin" lost 96% of its value since 1913. Time to try something different? https://comparegoldandsilverprices.com/news/economics-101/dollar-devaluation-since-1913/ https://comparegoldandsilverprices.com/news/economics-101/do...
  - crooked-v 8y ago
    That article is dramatically inaccurate in many ways, starting with its claim of gold's value not changing over time.
  - arcticbull 8y ago
    I can’t overstate this enough, DONT HOLD DOLLARS. Currency is intentionally lossy so you invest it in productive assets. You’re pointing to a feature and yelling bug because you don’t seem to understand how it’s meant to work. Wages kept pace so earn rate remained constant or better and if you invested instead of throwing dollar bills under your mattress you’d have done incredibly well as the S&P has had a historical 7% geometric return. Finally, all the popular stable coins are literally indexed to the US dollar, so you can’t say USDC/USDT is great then whine about the USD right?
  - wcarron 8y ago
    What a strawman. Inflation BAAAAAD, right guys? C'mon. We all know why the Fed targets a relatively consistent rate of inflation. It's because deflation suppresses consumer spending. Not what you want in a consumer economy.
    - cheeseomlit 8y ago
      What if I want to save? Certainly seems kinda bad when my savings keeps losing value
      - askafriend 8y ago
        Why not save shares of the S&P 500 index? You just sell some when you want to buy something like a car.
endijs 8y ago
I understand why stablecoin's are useful to the end user. I also understand how Bitfinex is cashing in on Tether. However how is Coinbase making money with USDC? They clearly will have considerable expenses (keeping reserve, legal team, development etc. etc.). But if I give them 1USD and get back 1USDC, which later can be exchanged back to 1 USD, where are they making money?
- larrysalibra 8y ago
  Presumably they'll charge you a fee to buy, sell and trade it just like any other asset. If coinbase is involved in keeping the reserve, they can invest it various assets and keep the earnings - think money market fund, but you don't earn any interest - coinbase/circle keep the interest.
  - seanalltogether 8y ago
    > If coinbase is involved in keeping the reserve, they can invest it various assets and keep the earnings If that's the case I wish they were up front about that fact. I think its completely reasonable that they would keep any earned interest as compensation for managing the coin, so just be honest about it.
    - deleted 8y ago
      [deleted]
    - kaffeemitsahne 8y ago
      I don't see any reason to assume they will pay interest on the USD in custody, nor do they claim to do so, which makes them 100% honest in my book.
- hiimnate 8y ago
  Don't they charge purchase fees?
  - radicaldreamer 8y ago
hendzen 8y ago
Blockchain-based stablecoins seem like a really convoluted and environmentally wasteful way to implement centralized, cryptographically secure USD based account transfers. Why not just use Chaumian ecash [0] - which is perfectly suitable for this purpose and doesn't require mining? [0] - http://sceweb.sce.uhcl.edu/yang/teaching/csci5234WebSecurityFall2011/Chaum-blind-signatures.PDF http://sceweb.sce.uhcl.edu/yang/teaching/csci5234WebSecurity...
- davidzki 8y ago
  Perhaps this is another answer to these environmental concerns? https://medium.com/poa-network/poa-network-partners-with-makerdao-on-xdai-chain-the-first-ever-usd-stable-blockchain-65a078c41e6a https://medium.com/poa-network/poa-network-partners-with-mak...
- otoburb 8y ago
  >>Why not just use Chaumian ecash [...] David Chaum probably asked exactly the same question, and starting working on his own own blockchain and cryptocurrency[1] in 2015[2]. I'm a bit sad he didn't call it eCash 2.0. [1] https://www.prnewswire.com/news-releases/announcing-david-chaums-elixxir-first-blockchain-capable-of-meeting-the-needs-of-consumer-scale-messaging-and-payments-300715769.html https://www.prnewswire.com/news-releases/announcing-david-ch... [2] https://www.prnewswire.com/news-releases/global-investors-back-elixxir-a-next-generation-blockchain-platform-focused-on-mainstream-adoption-300735829.html https://www.prnewswire.com/news-releases/global-investors-ba...
Permit 8y ago
Stablecoins 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 excited. In fact they seemed upset that Coinbase didn't announce support for their cryptocoin du jour (mostly Ripple or Cardano). This is a recurring theme on all the subreddits I've visited: People rarely care about the usage of their cryptocurrency, they're only interested in its price. A cryptocurrency that stays the same value is not very interesting to traders and therefore most of the cryptocurrency community. [1] https://twitter.com/coinbase/status/1054764504259543041 https://twitter.com/coinbase/status/1054764504259543041
- Pharmakon 8y ago
  You go from saying it achieves the goal of being decentralized, and in the next breath point out that it’s centralized. I don’t get it.
  - radicaldreamer 8y ago
    The transactions can be decentralized while the mining is centralized.
    - Pharmakon 8y ago
      Ok, I see. Still it seems like the dream of cryptocurrency was total decentralization. If the supply is centralized does it matter if the transactions aren’t? It’s still a single point of failure.
  - Permit 8y ago
    Decentralized transactions are distinct from decentralized issuance. Decentralized issuance doesn't matter to most people in the cryptocurrency ecosystem. They have been happy to participate in ICOs where coins are issued from a central authority. That said, I haven't yet heard anything on how transactions are actually verified (ie. Proof of work vs Proof of Stake) Edit: It appears to be an Ethereum-based token: https://support.usdc.circle.com/hc/en-us/articles/360015471331-Circle-USDC-Fee-Schedule https://support.usdc.circle.com/hc/en-us/articles/3600154713...
larrysalibra 8y ago
Something that's missing from this article: Since USDC is an ERC20 token based on Ethereum, you'll still need to hold ETH so that you can pay for gas to move the USDC stablecoin token around. A fiat-world analogy to this would be to imagine if spending Euros required you to hold US Dollars to pay the transaction fees.
- conanbatt 8y ago
  Another fiat-world analogy is paying to have the checkbook to be able to send money.
- mavdi 8y ago
  Most coins are ERC20 coins. These coins might dance around all day, but the DJ is Ethereum. That's what you should be really holding.
jeletonskelly 8y ago
How are USD backed cryptocurrencies not considered illegal USD surrogates? If they aren't yet, maybe they will be once there's a lawsuit.
- crooked-v 8y ago
  It looks like a repeat of the Liberty Dollar to me, and that whole affair ended with charges of money laundering, mail fraud, wire fraud, counterfeiting, and conspiracy. https://en.wikipedia.org/wiki/Liberty_dollar_(private_currency) https://en.wikipedia.org/wiki/Liberty_dollar_(private_curren...
  - Gaelan 8y ago
    Liberty Dollar was backed by gold. USDC is backed by USD.
    - paulmd 8y ago
      The problem is not what the transfers are denominated in, you could have LamboCoin if you wanted. It's acting as an unlicensed money transmitter at all that will get you. Denominating in gold or lambos or USD doesn't get you around KYC/AML laws. Decentralized ERC20 tokens designed to transmit money are inherently illegal, and setting one up will get you a visit from the SEC if you can be traced back to it in any way. There is no end-run around this, this behavior is literally the exact thing KYC/AML laws are designed to prevent. (This coin gets around it because it is not decentralized - only the company can mine blocks on this chain, and they can block transactions at will and validate IDs/etc when transacting back to USD. This allows them to enforce KYC/AML. They are aiming to be a licensed money transmitter.)
- lacker 8y ago
  A money market account is also not considered an illegal USD surrogate.
max76 8y ago
Trading is all about trust. This represents an odd level of trust. The user trusts Circle and Coinbase enough to purchase USDC at facevalue. The user doesn't trust Circle or Coinbase enough to keep private transaction histories. I understand the position of fully trusting the third party (Visa, Paypal, Stripe) when combined with legal protections. I understand the position of fully distrusting third parties (bitcoin, etc). I do not understand why someone would prefer this mixed level of trust.
apo 8y ago
Stablecoins appear to be the new ICO. USDC follows on the heels of the Gemini Dollar, and a raft of other stablecoins offered by fully-regulated bank-like entities. Oddly, there's nothing about regulatory compliance (AML/KYC) or fungibility in the announcement. Based purely on the article, one might get the idea that USDC can be traded between individuals without any third party oversight and in a censorship-resistant way. It's highly unlikely this will be the case, given the potential for money laundering. So... USDC users get a form of digital dollar that's more difficult to use than PayPal and the numerous alternatives because unlike those systems, the user must secure cryptographic material. Alternatively, the user will simply deposit USDC onto an exchange and gain absolutely nothing over PayPal and friends. Even worse, should the user decide to make an on-chain USDC transaction, a permanent public record will be logged on the Ethereum block chain, which can be used in various ways with any information lost by Circle/Coinbase due to the inevitable data breaches (legal and illegal) to come. I'm all for innovation in this space, but caveat emptor couldn't be more relevant.
- beaner 8y ago
  It can be traded directly. It's just an erc20 token.
  - apo 8y ago
    I understand its an ERC20 token. Do you understand how Coinbase and Circle will remain within regulatory compliance (AML/KYC) regarding USDC and the obvious potential for money laundering?
    - astrodust 8y ago
      The real question is will they even try, or will they pretend it's not a problem?
    - otoburb 8y ago
      Money laundering is a problem they must have faced earlier when allowing BTC trades, so presumably they'll operate under the same AML/KYC regulatory compliance umbrella required to offer their current (and growing) set of digital currencies[1][2]. [1] https://support.coinbase.com/customer/en/portal/articles/2630943-supported-digital-currencies https://support.coinbase.com/customer/en/portal/articles/263... [2] https://www.circletrade.com/individuals/basic https://www.circletrade.com/individuals/basic
esotericn 8y ago
"Stablecoins" are neither "stable" or "coins". Blockchain is a Semantic Wasteland: https://news.ycombinator.com/item?id=18267585 https://news.ycombinator.com/item?id=18267585 There are a few cryptocurrencies that are actually interesting. This is yet another nonsense money grab.
- DSingularity 8y ago
  In this instance I disagree. This is a smart contract which will create USDC for each USD that Coinbase reserves. In other words, each USDC has a single USD backing it. To back the guarantee they are slowing audits of their reserves. This one is pretty straightforward.
fiatjaf 8y ago
Seriously, what is the point? Even if this is a perfectly honest and functioning system, if you're using a currency that is pretty much like the dollar, regulated as the dollar, inflated as the dollar, why not just use the dollar?
- lacker 8y ago
  Since it's an Ethereum token, you can write smart contracts that use dollars instead of smart contracts that use ETH.
  - rlucas 8y ago
    Buuuutttt, since it's not dollars you have to trust that a market maker counterparty will stand behind the peg when you do want to liquidate.
shittyadmin 8y ago
Well, it'll be interesting to see if Tether falls apart soon.
ThrustVectoring 8y ago
"Stablecoin" in general generates a ton of legal risk for the operators. If you can make peer-to-peer transactions with it, then the coin operators are definitely not complying with Know Your Customer and Anti-Money Laundering laws. This will pretty reliably get the US Feds to raid your offices, seize your website and servers, arrest the principles responsible, and prosecute them. See also: Liberty Reserve. On the other hand, if you can't make peer-to-peer transactions with it, it's basically a "blockchain" in name only. There's little advantage over traditional bank account systems. Maybe the programmability and verifiability helps? I just don't see that sort of thing doing a lot compared to the whole money-laundering use case, though.
- lacker 8y ago
  If you can make peer-to-peer transactions with it, then the coin operators are definitely not complying with Know Your Customer and Anti-Money Laundering laws. You can certainly make peer-to-peer transactions with it. But I think you are misinterpreting the KYC laws. Circle (who operates USDC) isn't trying to be secretive about this. They are regulated as a "money transmitter" and a "money services business" - https://www.circle.com/en/usdc https://www.circle.com/en/usdc . IANAL but Circle certainly seems prepared to take on any legal risks involved here.
  - ThrustVectoring 8y ago
    If I was working at that company I'd be sending out my resume and looking for alternatives.
  - vkou 8y ago
    When I cash out $50 worth of USDC, how will Circle know that I'm not laundering drug money?
    - vntok 8y ago
      Check the blacklists.
- werds 8y ago
orthecreedence 8y ago
Coinbase has USDC, Gemini has GUSD. Will be interesting to see how this plays out. I'm curious if adoption becomes a function of which fly-by-night exchanges start launching pairs. But then again, if the fees are low enough (if my $1 truly gets me one token, and one token gets me $0.9999 back) these tokens are going to be useful in themselves without needing to be traded on seedy exchanges. It would be great for taking micropayments on online services. The thing I worry about is how these tokens are set up. If there is central control, can the governing bodies at any time decide to deactivate my tokens? I'd like to see the actual "contracts" behind these tokens. And even then, the contracts can change and be updated. Obviously there are some regulatory protections, but that won't fix people hacking these contracts. I guess what I'm saying is, "hmm, interesting, I'll check it out in a few years." Until then I'll likely just use it for hedging against other cryptos while speculating if/when I decide to get back in the market.
- stanleydrew 8y ago
  Somewhat unrelated, but the reason micropayments aren't a thing isn't that transaction fees are too high. The reason is that consumers hate them. http://www.shirky.com/weblog/2009/02/why-small-payments-wont-save-publishers/ http://www.shirky.com/weblog/2009/02/why-small-payments-wont...
  - Obi_Juan_Kenobi 8y ago
    The idea of a micropayment isn't monolithic. People certainly will not like to be nickle-and-dimed to read the news, but that's fairly obvious. The real model here is Patreon. Patreon is (well, was) about bundling payments to make recurring micropayments practical. Their execution has issues (it's also highly successful) but the fundamental idea of recurring micropayments is totally sound. Audiences are receptive to it, and creators can legitimately support their work with this kind of aggregate payment.
- wslh 8y ago
  > I'd like to see the actual "contracts" behind these tokens. https://github.com/centrehq/centre-tokens https://github.com/centrehq/centre-tokens and https://github.com/paxosglobal/pax-contracts https://github.com/paxosglobal/pax-contracts give you some idea. There is obviously an external system minting and burning these tokens.
jatsign 8y ago
Have they published the contract to the blockchain yet? I'm curious how much control over it they will have. I would suspect that only they can issue it, and that they can destroy any USDC they want at any time.
jf- 8y ago
I have to wonder what these coins actually offer the consumer. If they’re to be used as a real world currency for transactions, they would need to have some utility over credit/debit cards. I don’t see what that utility is. I can already make instantaneous purchases via contactless, and while there is a fee for international purchases, it’s not large enough, nor do I encounter it frequently enough, for me to look for an alternative. Why as an ordinary consumer would I bother with these?
- jatsign 8y ago
  An ordinary consumer wouldn't. For me, likely use cases are: - Transmitting money overseas. This should be way cheaper. - Vendors who are tired of paying 2.5% to credit card companies giving a discount to using crypto.
  - jf- 8y ago
    That seems more like an argument for a cheap foreign exchange service, of which I believe there are several now.
    - celticninja 8y ago
      But they are no where near as easy to use as cryptocurrency. Back in 2010/2011 I used bitcoin to buy stuff from China, I was paying something ridiculous to do the same thing via traditional banks in fees and poor exchange rates. Even now these foreign exchange services make it better but only for larger transactions. Small/medium transactions still pay a ridiculous rate/fee compared to cryptocurrency. Further exacerbated if the recipient has difficulty obtaining banking facilities.
  - atomical 8y ago
    > Transmitting money overseas Curious to know if this will follow AML laws. Imagine you send a USDC coin to a person overseas. It then is sent to a few other people and then someone tries to cash it out in the US again. Couldn't Coinbase decide that the chain of send/receives is illegal with chain analysis?
deleted 8y ago
[deleted]
jessepollak 8y ago
Hi all — head of engineering for the consumer product at Coinbase here (iOS, Android, coinbase.com). Happy to answer any questions that people have — also, just wanted to make a plug that we're hiring. If you're interested in building an open financial system for the world, shoot me a note at jpollak@coinbase.com. Especially interested in iOS & Android engineers!
- jatsign 8y ago
  Have you published the USDC contract to the network?
  - QML 8y ago
    I believe this is it: https://etherscan.io/address/0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48 https://etherscan.io/address/0xa0b86991c6218b36c1d19d4a2e9eb....
  - jessepollak 8y ago
    Yes, you can see the contract here: https://etherscan.io/address/0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48 https://etherscan.io/address/0xa0b86991c6218b36c1d19d4a2e9eb.... Thanks!
  - anders94 8y ago
    Anders Brownworth from Circle here - I just wanted to point out that https://etherscan.io/address/0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48#code https://etherscan.io/address/0xa0b86991c6218b36c1d19d4a2e9eb... is the proxy contract. (an address that won't change but who's source code doesn't contain the "meat" of the logic) That contract simply proxies calls to the current main FiatToken contract deployed at https://etherscan.io/address/0x0882477e7895bdc5cea7cb1552ed914ab157fe56#code https://etherscan.io/address/0x0882477e7895bdc5cea7cb1552ed9... but if you want to see the official repository for the project, it is available from CENTRE on GitHub at https://github.com/centrehq/centre-tokens https://github.com/centrehq/centre-tokens
- ehrtt 8y ago
  What will Coinbase do if there is a contentious hard-fork of the Ethereum chain and different USDC supporting exchanges decide to follow different forks?
Vector919 8y ago
Anyone have any idea why this can't be used in New York?
- bjoveski 8y ago
  NY has special license requirements regarding crypto currencies https://en.wikipedia.org/wiki/BitLicense https://en.wikipedia.org/wiki/BitLicense
  - skykooler 8y ago
    But according to that page, Coinbase already has a BitLicense?
Fej 8y ago
It 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 US). Like others have said here, expect them to stomp the shit out of this. Unrelated: has anyone audited the contract?
- umanwizard 8y ago
  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.))
  - omarchowdhury 8y ago
    I would assume Circle (backed by Goldman Sachs) is keeping the reserve dollars in segregated, FDIC insured bank accounts. Would be out of character and expected policy for a U.S. operation to not to.
  - ur-whale 8y ago
    >is backed by the FDIC Isn't FDIC backing capped?
- blhack 8y ago
  It's pegged to the USD, isn't it?
  - ur-whale 8y ago
    >It's pegged to the USD, isn't it? That's the intent. They may vastly over-estimate their ability to maintain the peg.
antiffan 8y ago
I’m trying to think of use-cases for trusted stable-coins. The obvious one is just another way to sell products — this has failed for Bitcoin due to volatility risk. One scenario I can think of is a decentralized e-reader and e-book marketplace: - you have an e-reader app that is capable of decrypting books stored somewhere, as long as the content was encrypted with your public key - authors publish their books to contracts that accept payments via an ERC20 stable-coin - the contract responds by encrypting a copy of the book with your public key and placing it at a location your e-reader can retrieve it Are there inherent advantages to a decentralized book store vs. Amazon though? Not sure…
scabarott 8y ago
I think stablecoins is where the cryptocurrency experiment is headed for the near & forseeable future. It's interesting to watch the experiment slowly give way to the reality of operating in the world at large. At least we still get some form of digital money. On another note, I think it's really concerning how much of a monopoly Coinbase is becoming in this space. They're probably the only corporate entity making any real (no-scam) money (in the US) and everyday they seem to be morphing into some kind of Goldman Sachs/Google/Microsoft hybrid of crypto-money.
- MrEfficiency 8y ago
  I would agree for non bitcoin cryptocurrency. Bitcoin has already established itself as a worldwide currency/store of value. Outside of bitcoin, smart coins failed due to their inability to scale. Bitcoin copy pastes or centralized currency coins are useless, day traders were obsessed and let these gain popularity. I do not expect these to last. Privacy coins have a chance to survive, but they will likely need to fix scaling issues. >Coinbase monopoly Give it less than 1 year, this board knows that development takes time. Feburary this year we were told by the US government that crypto was not going to be banned. This was huge news for everyone that had crypto for the last few years.
deleted 8y ago
[deleted]
anders94 8y ago
Hi, I'm Anders Brownworth, Chief Evangelist at Circle. I'm happy to answer any questions on USD Coin, CENTRE or Circle. We're also hiring! See https://circle.careers/ https://circle.careers/
- jdoliner 8y ago
  Does Circle keep enough dollars on hand to buy back every USDC? Or do you run a fractional reserve? How much money is that total? What do you do if you have as many USDCs in circulation as you have dollars? Stop issuing them?
  - anders94 8y ago
    Circle holds one dollar for every dollar minted, we do not run a fractional reserve. The CENTRE Consortium holds minters (of which Circle is one) to strict auditing requirements. While this information is regularly published, you can see all minting and burning operations (as well as all transfers and other token operations) in realtime on the Ethereum blockchain. See etherscan: https://etherscan.io/address/0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48#events https://etherscan.io/address/0xa0b86991c6218b36c1d19d4a2e9eb... There are always as many USDCs in circulation as there are fiat dollars backing them up in traditional bank accounts. The only way minters produce more in a 1 to 1 manner is if someone wires traditional dollars in. Likewise, Circle will burn USDCs in a 1 to 1 manner as requests for traditional fiat dollar withdrawals are processed.
    - jdoliner 8y ago
      Thanks for the quick answer, this all makes sense. Does this get limiting at all, in terms of wanting to mint new coins and not having the capital to do so?
      - minderasure 8y ago
        That's like saying isn't it a bummer I cant just print money out of thin air to buy stuff. The whole point is to give people faith and trust in the stablecoin exactly because thie issuance process relies on locking up 1 USD.
sgondala2 8y ago
How can stable coin ever maintain the price? People can still speculate and sell it for more than a $, and buyers can buy it for more than a $.
- loeg 8y ago
  Traders, including HFT, are incentivized by the underlying value to keep the bid/ask spread very tight.
  - sgondala2 8y ago
    Isn't this the same for any coin? Is making a stable coin as simple as naming it a 'stable' coin ?
    - loeg 8y ago
      You could ask the same question about any security. Yes, traders in general are incentivized to bid/ask near the actual value of the underlying security. The difference between securities in the abstract and a trustworthy, 100% reserve stablecoin is that the value of the latter is both known ($1) and stable (at least in USD terms). Yeah, stablecoins really are as simple as naming it a stable coin and pledging 100% real currency backing, so long as you can convince traders you are trustworthy. E.g., I have some confidence Coinbase is trustworthy; I have zero confidence Bitfinex is trustworthy.
nickthemagicman 8y ago
Is there like a large bank account somewhere that will hold al the 'dollars' backing the billions of USDC? How is this implemented?
- sitepodmatt 8y ago
  That's the idea, but previous stable coins have had trouble proving such and met a lot of community rejection (deservedly).
oropolo 8y ago
"Digital dollars?" We already have that -- it's called the US Dollar. Only 10% of the USD money supply is in physical paper or coin form. I receive my wages electronically and pay my mortgage, car payment, insurance, student loan, and buy groceries and entertainment without ever touching printed/minted money. And I suspect I'm in the majority on this point.
- DINKDINK 8y ago
  Digital dollar != a programmable digital dollar. It's like bitcoin, but will all the downsides of the dollar (endlessly inflating) + all the fragility and throughput constraints and centralization risks of ethereum.
viach 8y ago
How is that different from PayPal?
Animats 8y ago
OK. So how does the backing of this "stablecoin" work? Here's the website: https://www.centre.io/usdc https://www.centre.io/usdc Here's the whitepaper: https://www.centre.io/pdfs/centre-whitepaper.pdf https://www.centre.io/pdfs/centre-whitepaper.pdf There's very little about who actually has custody of the paid-in money and what guarantees it gets paid out if "stablecoin" outflow exceeds inflow. The "smart contract" machinery doesn't really do much about that part. Tether has been vague about that, too. Tether has been trading at a discount to the dollar, lately about 3-5%.[1] The usual failure mode is that whoever has custody of the money starts investing it. They don't have to pay the profits to the coin holders. Then they start making risky investments. Then they lose money. Then they start faking it. In the real brokerage world, they go to jail for speculating with customer funds. [1] https://cryptocoincharts.info/pair/usdt/usd/kraken/1-month https://cryptocoincharts.info/pair/usdt/usd/kraken/1-month
lucio 8y ago
Then next great "innovation" is to speed-up transactions for USDC by using a centralized server. /s
alcio 8y ago
It's funny that the USDC website doesn't list the main use of stablecoins (especially Tether) these days: arbitrage. When moving fiat between two exchanges can take days and flag your accounts for suspicious activity, moving the same value using Tether is much much faster (~30 mins to 1 hour). If one observes how does USDT flows, you'll find that it flows between the 3 or 4 major exchanges that use it, with almost no use elsewhere: no major wallets, no merchant acceptance, etc..
simonebrunozzi 8y ago
I still don't understand what's the "underlying technology". They call it a Blockchain, is it a permissioned Blockchain?
mehmeta 8y ago
The main problem with fiat backed stablecoins is that in addition to smart contract/theoretical security, you now have to also trust the procedural security of the entity issuing the asset. A collateralized stablecoin like Maker/Dai doesn't have that additional attack vector. For example, if the keys issuing the USDC has ever been compromised, new assets can be issued instantly by an attacker, compromising fungibility and causing other problems. Whereas if Maker/Dai smart contract proves secure over time, there's no centralized issuing entity/keys to compromise. Afaik the only centralized privilege controlled by MakerDAO is the global settlement, which merely refunds everyone their ether.
- chemmail 8y ago
  The problem with stablecoins, there is no such thing as a stable coin.
  - QML 8y ago
    Whats the difference between a stablecoin and an IOU?
    - mehmeta 8y ago
      Both fiat backed assets as well as collateralized assets pegged to fiat money are called stablecoins, because they are meant to represent units of fiat money, and therefore "stable" relative to fiat. Fiat backed stablecoins fit the definition of an IOU better, since they are cryptographic promises to pay the bearer by centralized issuing entities. Whereas collateralized stablecoins are not IOUs, they are effectively loans on other cryptoassets you deposit in a smart contract (ether, in Maker/Dai's case).
sitepodmatt 8y ago
There is a lot of negativity on this but it must be more preferable to the Tether train wreck, the backing alone of Circle and Coinbase puts this on another level in terms of legitimacy. There is certainly a market for it, given there's 2billion of Tether in ~circulation (although who knows how much is actually backed by US$).
Paladiamors 8y ago
I've taken a look at the many threads happening here and a large number of people discussing the "worthlessness" of the having a stable coin because of the lack of volatility vs the USD. I'm actually quite interested in the outcome of this, especially because of transaction fees for credit card payments are so high. For some places in Asia, Japan in particular has credit card transaction fees of in the 3.6% range and going up to 4.5% for international cards. For businesses selling services in the $2500 range, just at 3.6% of this transaction becomes $90 in fees just for a single transaction. Which, I think, is quite high just for moving a digital asset around. While the prospects of "trading" this asset might not be as interesting, the potential for far lower transaction fees for people running a business seems very attractive to me.
vesak 8y ago
My virus/malware checker marks this blog as harmful.
ur-whale 8y ago
Long 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.
ur-whale 8y ago
IMO, this is just yet another crypto exchange trying to solve their day to day liquidity headaches, with some sugar sprinkled on (programmable USD). In doing so, I think they gravely underestimate the kind of meat-grinder they're putting their hand in (as in: the kind of liability they're taking on).
NoblePublius 8y ago
Can someone please explain the functional superiority of this over, say, a Venmo balance?
- devmeplease 8y ago
  It uses blockchain technology to handle transferring funds as apposed to something like Visa.
  - NoblePublius 8y ago
    Visa processes transactions much faster, is accepted universally, has AML/fraud/chargeback insurance, and costs about 2.4% of transaction volume. This has none of those and transaction costs are TBD. I’m not trying to be a sceptic but I’m not yet convinced. “It’s decentralized” is not an argument unto itself and certainly not an argument of functional superiority. If anything it’s slower, harder to use, and more risky. I don’t care if my payment system is on Visa or AWS or a blockchain. I care that it’s fast and secure. I care that when a merchant defrauds me I get my money back.

424 points by _nvs 8y ago

azinman2 8y ago

But if it’s pegged to the dollar, how do I speculate on it?!

empath75 8y ago
It makes it more useful for money laundering probably.
ISL 8y ago
Forex futures.
jatsign 8y ago
Buy ethereum. If this works, transmission would require ETH to be paid as gas.

seibelj 8y ago

Probably the first piece of the crypto ecosystem where being a trusted, regulated entity in a country with a real court system is an asset rather than a liability.

buildbuildbuild 8y ago

Excited to see a reputable company like Coinbase launch this. Hopefully with their reputation we can avoid another Tether situation. The US government should launch their own stablecoin. A digital US dollar is a national need that shouldn’t be managed by a corporation in my opinion.

cheeseomlit 8y ago
USD is already digital, the vast majority of dollars in circulation are not bills/coins
- agorabinary 8y ago
  Can you withdraw your USD to a flash drive?
  - jf- 8y ago
    Would that be a good idea? Do you want your money to be in a state where it can very easily become unrecoverable?
    - donatj 8y ago
      Like cash?
      - jf- 8y ago
        Hmm. So you can’t see any differences between a flash drive and cash? If you withdrew your life savings in cash, that cash couldn’t become corrupted, unless by physical damage. Your life savings in cash would also be large enough that you wouldn’t be likely to lose it, or have the container it sits in easily stolen or accidentally smashed. You also are not very likely to forget or misplace the password to your cash. Or, you could just use a credit card and have fraud protection.
        reidjs 8y ago
        If I had my life savings on a flash drive I think I could keep track of it pretty well. The nice thing about crypto wallets is you can replicate the secret key indefinitely. So, even if the drive is stolen you still have a password protected backup. If the cash is stolen, well, possession is 9/10s the law ;).
- buildbuildbuild 8y ago
  Consumers currently cannot hold USD electronically without a bank.
  - 8y ago
soared 8y ago
Why does there need to be a digital US dollar? Almost 20% of the US is underbanked, and 6.5% is unbanked. A digital dollar seemingly would be even worse and work to concentrate wealth among the educated/wealthy. https://www.fdic.gov/householdsurvey/ https://www.fdic.gov/householdsurvey/
- arcticbull 8y ago
  Many low income people have smartphones actually, and use them in lieu of desktops. Not being connected isn’t the reason they’re unbanked or underbanked, you could argue moving more to digital would include more of them. Plus the US dollar is already digital. In part they don’t have bank accounts because they’re poor, so they don’t have money to put in them. If they weren’t broke they’d have bank accounts. IMO this is more a function of wealth inequality in the US than of banking. Think about it, you’ve got $0. Now I give you a fee free bank account. You’ve still got $0. You’re no more included in the financial system.
  - soared 8y ago
    If they're already connected, why would moving digital include more of them in banking? They're not using physical banking now, I don't see how digital banking would convert them.
    - arcticbull 8y ago
      I meant having more ways to spend their money directly from their phones would allow them to avoid having to withdraw from physical ATMs, and more digital acceptance options means not having to deposit at ATMs. Those are kind of the last vestiges of the physical banking system. These problems are being solved though. Basically any time you’ve seen a “cash only” sign, it’s a blocker to totally digital banking. Low income folks get wrecked disproportionately by the high fees associated with physical retail banking (including ATMs). They charge flat fees (like Cryptos incidentally) which function as a regressive tax on the poor. Digital banking, by virtue of not having to deal with real estate and physical assets is more efficient and cheaper.
billions 8y ago
The government's "stable coin" lost 96% of its value since 1913. Time to try something different? https://comparegoldandsilverprices.com/news/economics-101/dollar-devaluation-since-1913/ https://comparegoldandsilverprices.com/news/economics-101/do...
- crooked-v 8y ago
  That article is dramatically inaccurate in many ways, starting with its claim of gold's value not changing over time.
- arcticbull 8y ago
  I can’t overstate this enough, DONT HOLD DOLLARS. Currency is intentionally lossy so you invest it in productive assets. You’re pointing to a feature and yelling bug because you don’t seem to understand how it’s meant to work. Wages kept pace so earn rate remained constant or better and if you invested instead of throwing dollar bills under your mattress you’d have done incredibly well as the S&P has had a historical 7% geometric return. Finally, all the popular stable coins are literally indexed to the US dollar, so you can’t say USDC/USDT is great then whine about the USD right?
- wcarron 8y ago
  What a strawman. Inflation BAAAAAD, right guys? C'mon. We all know why the Fed targets a relatively consistent rate of inflation. It's because deflation suppresses consumer spending. Not what you want in a consumer economy.
  - cheeseomlit 8y ago
    What if I want to save? Certainly seems kinda bad when my savings keeps losing value
    - askafriend 8y ago
      Why not save shares of the S&P 500 index? You just sell some when you want to buy something like a car.

endijs 8y ago

I understand why stablecoin's are useful to the end user. I also understand how Bitfinex is cashing in on Tether. However how is Coinbase making money with USDC? They clearly will have considerable expenses (keeping reserve, legal team, development etc. etc.). But if I give them 1USD and get back 1USDC, which later can be exchanged back to 1 USD, where are they making money?

larrysalibra 8y ago
Presumably they'll charge you a fee to buy, sell and trade it just like any other asset. If coinbase is involved in keeping the reserve, they can invest it various assets and keep the earnings - think money market fund, but you don't earn any interest - coinbase/circle keep the interest.
- seanalltogether 8y ago
  > If coinbase is involved in keeping the reserve, they can invest it various assets and keep the earnings If that's the case I wish they were up front about that fact. I think its completely reasonable that they would keep any earned interest as compensation for managing the coin, so just be honest about it.
  - deleted 8y ago
    [deleted]
  - kaffeemitsahne 8y ago
    I don't see any reason to assume they will pay interest on the USD in custody, nor do they claim to do so, which makes them 100% honest in my book.
hiimnate 8y ago
Don't they charge purchase fees?
- radicaldreamer 8y ago

hendzen 8y ago

Blockchain-based stablecoins seem like a really convoluted and environmentally wasteful way to implement centralized, cryptographically secure USD based account transfers. Why not just use Chaumian ecash [0] - which is perfectly suitable for this purpose and doesn't require mining? [0] - http://sceweb.sce.uhcl.edu/yang/teaching/csci5234WebSecurityFall2011/Chaum-blind-signatures.PDF http://sceweb.sce.uhcl.edu/yang/teaching/csci5234WebSecurity...

davidzki 8y ago
Perhaps this is another answer to these environmental concerns? https://medium.com/poa-network/poa-network-partners-with-makerdao-on-xdai-chain-the-first-ever-usd-stable-blockchain-65a078c41e6a https://medium.com/poa-network/poa-network-partners-with-mak...
otoburb 8y ago
>>Why not just use Chaumian ecash [...] David Chaum probably asked exactly the same question, and starting working on his own own blockchain and cryptocurrency[1] in 2015[2]. I'm a bit sad he didn't call it eCash 2.0. [1] https://www.prnewswire.com/news-releases/announcing-david-chaums-elixxir-first-blockchain-capable-of-meeting-the-needs-of-consumer-scale-messaging-and-payments-300715769.html https://www.prnewswire.com/news-releases/announcing-david-ch... [2] https://www.prnewswire.com/news-releases/global-investors-back-elixxir-a-next-generation-blockchain-platform-focused-on-mainstream-adoption-300735829.html https://www.prnewswire.com/news-releases/global-investors-ba...

Permit 8y ago

Stablecoins 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 excited. In fact they seemed upset that Coinbase didn't announce support for their cryptocoin du jour (mostly Ripple or Cardano). This is a recurring theme on all the subreddits I've visited: People rarely care about the usage of their cryptocurrency, they're only interested in its price. A cryptocurrency that stays the same value is not very interesting to traders and therefore most of the cryptocurrency community. [1] https://twitter.com/coinbase/status/1054764504259543041 https://twitter.com/coinbase/status/1054764504259543041

Pharmakon 8y ago
You go from saying it achieves the goal of being decentralized, and in the next breath point out that it’s centralized. I don’t get it.
- radicaldreamer 8y ago
  The transactions can be decentralized while the mining is centralized.
  - Pharmakon 8y ago
    Ok, I see. Still it seems like the dream of cryptocurrency was total decentralization. If the supply is centralized does it matter if the transactions aren’t? It’s still a single point of failure.
- Permit 8y ago
  Decentralized transactions are distinct from decentralized issuance. Decentralized issuance doesn't matter to most people in the cryptocurrency ecosystem. They have been happy to participate in ICOs where coins are issued from a central authority. That said, I haven't yet heard anything on how transactions are actually verified (ie. Proof of work vs Proof of Stake) Edit: It appears to be an Ethereum-based token: https://support.usdc.circle.com/hc/en-us/articles/360015471331-Circle-USDC-Fee-Schedule https://support.usdc.circle.com/hc/en-us/articles/3600154713...

larrysalibra 8y ago

Something that's missing from this article: Since USDC is an ERC20 token based on Ethereum, you'll still need to hold ETH so that you can pay for gas to move the USDC stablecoin token around. A fiat-world analogy to this would be to imagine if spending Euros required you to hold US Dollars to pay the transaction fees.

conanbatt 8y ago
Another fiat-world analogy is paying to have the checkbook to be able to send money.
mavdi 8y ago
Most coins are ERC20 coins. These coins might dance around all day, but the DJ is Ethereum. That's what you should be really holding.

jeletonskelly 8y ago

How are USD backed cryptocurrencies not considered illegal USD surrogates? If they aren't yet, maybe they will be once there's a lawsuit.

crooked-v 8y ago
It looks like a repeat of the Liberty Dollar to me, and that whole affair ended with charges of money laundering, mail fraud, wire fraud, counterfeiting, and conspiracy. https://en.wikipedia.org/wiki/Liberty_dollar_(private_currency) https://en.wikipedia.org/wiki/Liberty_dollar_(private_curren...
- Gaelan 8y ago
  Liberty Dollar was backed by gold. USDC is backed by USD.
  - paulmd 8y ago
    The problem is not what the transfers are denominated in, you could have LamboCoin if you wanted. It's acting as an unlicensed money transmitter at all that will get you. Denominating in gold or lambos or USD doesn't get you around KYC/AML laws. Decentralized ERC20 tokens designed to transmit money are inherently illegal, and setting one up will get you a visit from the SEC if you can be traced back to it in any way. There is no end-run around this, this behavior is literally the exact thing KYC/AML laws are designed to prevent. (This coin gets around it because it is not decentralized - only the company can mine blocks on this chain, and they can block transactions at will and validate IDs/etc when transacting back to USD. This allows them to enforce KYC/AML. They are aiming to be a licensed money transmitter.)
lacker 8y ago
A money market account is also not considered an illegal USD surrogate.

max76 8y ago

Trading is all about trust. This represents an odd level of trust. The user trusts Circle and Coinbase enough to purchase USDC at facevalue. The user doesn't trust Circle or Coinbase enough to keep private transaction histories. I understand the position of fully trusting the third party (Visa, Paypal, Stripe) when combined with legal protections. I understand the position of fully distrusting third parties (bitcoin, etc). I do not understand why someone would prefer this mixed level of trust.

apo 8y ago

Stablecoins appear to be the new ICO. USDC follows on the heels of the Gemini Dollar, and a raft of other stablecoins offered by fully-regulated bank-like entities. Oddly, there's nothing about regulatory compliance (AML/KYC) or fungibility in the announcement. Based purely on the article, one might get the idea that USDC can be traded between individuals without any third party oversight and in a censorship-resistant way. It's highly unlikely this will be the case, given the potential for money laundering. So... USDC users get a form of digital dollar that's more difficult to use than PayPal and the numerous alternatives because unlike those systems, the user must secure cryptographic material. Alternatively, the user will simply deposit USDC onto an exchange and gain absolutely nothing over PayPal and friends. Even worse, should the user decide to make an on-chain USDC transaction, a permanent public record will be logged on the Ethereum block chain, which can be used in various ways with any information lost by Circle/Coinbase due to the inevitable data breaches (legal and illegal) to come. I'm all for innovation in this space, but caveat emptor couldn't be more relevant.

beaner 8y ago
It can be traded directly. It's just an erc20 token.
- apo 8y ago
  I understand its an ERC20 token. Do you understand how Coinbase and Circle will remain within regulatory compliance (AML/KYC) regarding USDC and the obvious potential for money laundering?
  - astrodust 8y ago
    The real question is will they even try, or will they pretend it's not a problem?
  - otoburb 8y ago
    Money laundering is a problem they must have faced earlier when allowing BTC trades, so presumably they'll operate under the same AML/KYC regulatory compliance umbrella required to offer their current (and growing) set of digital currencies[1][2]. [1] https://support.coinbase.com/customer/en/portal/articles/2630943-supported-digital-currencies https://support.coinbase.com/customer/en/portal/articles/263... [2] https://www.circletrade.com/individuals/basic https://www.circletrade.com/individuals/basic

esotericn 8y ago

"Stablecoins" are neither "stable" or "coins". Blockchain is a Semantic Wasteland: https://news.ycombinator.com/item?id=18267585 https://news.ycombinator.com/item?id=18267585 There are a few cryptocurrencies that are actually interesting. This is yet another nonsense money grab.

DSingularity 8y ago
In this instance I disagree. This is a smart contract which will create USDC for each USD that Coinbase reserves. In other words, each USDC has a single USD backing it. To back the guarantee they are slowing audits of their reserves. This one is pretty straightforward.

fiatjaf 8y ago

Seriously, what is the point? Even if this is a perfectly honest and functioning system, if you're using a currency that is pretty much like the dollar, regulated as the dollar, inflated as the dollar, why not just use the dollar?

lacker 8y ago
Since it's an Ethereum token, you can write smart contracts that use dollars instead of smart contracts that use ETH.
- rlucas 8y ago
  Buuuutttt, since it's not dollars you have to trust that a market maker counterparty will stand behind the peg when you do want to liquidate.

shittyadmin 8y ago

Well, it'll be interesting to see if Tether falls apart soon.

ThrustVectoring 8y ago

"Stablecoin" in general generates a ton of legal risk for the operators. If you can make peer-to-peer transactions with it, then the coin operators are definitely not complying with Know Your Customer and Anti-Money Laundering laws. This will pretty reliably get the US Feds to raid your offices, seize your website and servers, arrest the principles responsible, and prosecute them. See also: Liberty Reserve. On the other hand, if you can't make peer-to-peer transactions with it, it's basically a "blockchain" in name only. There's little advantage over traditional bank account systems. Maybe the programmability and verifiability helps? I just don't see that sort of thing doing a lot compared to the whole money-laundering use case, though.

lacker 8y ago
If you can make peer-to-peer transactions with it, then the coin operators are definitely not complying with Know Your Customer and Anti-Money Laundering laws. You can certainly make peer-to-peer transactions with it. But I think you are misinterpreting the KYC laws. Circle (who operates USDC) isn't trying to be secretive about this. They are regulated as a "money transmitter" and a "money services business" - https://www.circle.com/en/usdc https://www.circle.com/en/usdc . IANAL but Circle certainly seems prepared to take on any legal risks involved here.
- ThrustVectoring 8y ago
  If I was working at that company I'd be sending out my resume and looking for alternatives.
- vkou 8y ago
  When I cash out $50 worth of USDC, how will Circle know that I'm not laundering drug money?
  - vntok 8y ago
    Check the blacklists.
werds 8y ago

orthecreedence 8y ago

Coinbase has USDC, Gemini has GUSD. Will be interesting to see how this plays out. I'm curious if adoption becomes a function of which fly-by-night exchanges start launching pairs. But then again, if the fees are low enough (if my $1 truly gets me one token, and one token gets me $0.9999 back) these tokens are going to be useful in themselves without needing to be traded on seedy exchanges. It would be great for taking micropayments on online services. The thing I worry about is how these tokens are set up. If there is central control, can the governing bodies at any time decide to deactivate my tokens? I'd like to see the actual "contracts" behind these tokens. And even then, the contracts can change and be updated. Obviously there are some regulatory protections, but that won't fix people hacking these contracts. I guess what I'm saying is, "hmm, interesting, I'll check it out in a few years." Until then I'll likely just use it for hedging against other cryptos while speculating if/when I decide to get back in the market.

stanleydrew 8y ago
Somewhat unrelated, but the reason micropayments aren't a thing isn't that transaction fees are too high. The reason is that consumers hate them. http://www.shirky.com/weblog/2009/02/why-small-payments-wont-save-publishers/ http://www.shirky.com/weblog/2009/02/why-small-payments-wont...
- Obi_Juan_Kenobi 8y ago
  The idea of a micropayment isn't monolithic. People certainly will not like to be nickle-and-dimed to read the news, but that's fairly obvious. The real model here is Patreon. Patreon is (well, was) about bundling payments to make recurring micropayments practical. Their execution has issues (it's also highly successful) but the fundamental idea of recurring micropayments is totally sound. Audiences are receptive to it, and creators can legitimately support their work with this kind of aggregate payment.
wslh 8y ago
> I'd like to see the actual "contracts" behind these tokens. https://github.com/centrehq/centre-tokens https://github.com/centrehq/centre-tokens and https://github.com/paxosglobal/pax-contracts https://github.com/paxosglobal/pax-contracts give you some idea. There is obviously an external system minting and burning these tokens.

jatsign 8y ago

Have they published the contract to the blockchain yet? I'm curious how much control over it they will have. I would suspect that only they can issue it, and that they can destroy any USDC they want at any time.

jf- 8y ago

I have to wonder what these coins actually offer the consumer. If they’re to be used as a real world currency for transactions, they would need to have some utility over credit/debit cards. I don’t see what that utility is. I can already make instantaneous purchases via contactless, and while there is a fee for international purchases, it’s not large enough, nor do I encounter it frequently enough, for me to look for an alternative. Why as an ordinary consumer would I bother with these?

jatsign 8y ago
An ordinary consumer wouldn't. For me, likely use cases are: - Transmitting money overseas. This should be way cheaper. - Vendors who are tired of paying 2.5% to credit card companies giving a discount to using crypto.
- jf- 8y ago
  That seems more like an argument for a cheap foreign exchange service, of which I believe there are several now.
  - celticninja 8y ago
    But they are no where near as easy to use as cryptocurrency. Back in 2010/2011 I used bitcoin to buy stuff from China, I was paying something ridiculous to do the same thing via traditional banks in fees and poor exchange rates. Even now these foreign exchange services make it better but only for larger transactions. Small/medium transactions still pay a ridiculous rate/fee compared to cryptocurrency. Further exacerbated if the recipient has difficulty obtaining banking facilities.
- atomical 8y ago
  > Transmitting money overseas Curious to know if this will follow AML laws. Imagine you send a USDC coin to a person overseas. It then is sent to a few other people and then someone tries to cash it out in the US again. Couldn't Coinbase decide that the chain of send/receives is illegal with chain analysis?

deleted 8y ago

[deleted]

jessepollak 8y ago

Hi all — head of engineering for the consumer product at Coinbase here (iOS, Android, coinbase.com). Happy to answer any questions that people have — also, just wanted to make a plug that we're hiring. If you're interested in building an open financial system for the world, shoot me a note at jpollak@coinbase.com. Especially interested in iOS & Android engineers!

jatsign 8y ago
Have you published the USDC contract to the network?
- QML 8y ago
  I believe this is it: https://etherscan.io/address/0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48 https://etherscan.io/address/0xa0b86991c6218b36c1d19d4a2e9eb....
- jessepollak 8y ago
  Yes, you can see the contract here: https://etherscan.io/address/0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48 https://etherscan.io/address/0xa0b86991c6218b36c1d19d4a2e9eb.... Thanks!
- anders94 8y ago
  Anders Brownworth from Circle here - I just wanted to point out that https://etherscan.io/address/0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48#code https://etherscan.io/address/0xa0b86991c6218b36c1d19d4a2e9eb... is the proxy contract. (an address that won't change but who's source code doesn't contain the "meat" of the logic) That contract simply proxies calls to the current main FiatToken contract deployed at https://etherscan.io/address/0x0882477e7895bdc5cea7cb1552ed914ab157fe56#code https://etherscan.io/address/0x0882477e7895bdc5cea7cb1552ed9... but if you want to see the official repository for the project, it is available from CENTRE on GitHub at https://github.com/centrehq/centre-tokens https://github.com/centrehq/centre-tokens
ehrtt 8y ago
What will Coinbase do if there is a contentious hard-fork of the Ethereum chain and different USDC supporting exchanges decide to follow different forks?

Vector919 8y ago

Anyone have any idea why this can't be used in New York?

bjoveski 8y ago
NY has special license requirements regarding crypto currencies https://en.wikipedia.org/wiki/BitLicense https://en.wikipedia.org/wiki/BitLicense
- skykooler 8y ago
  But according to that page, Coinbase already has a BitLicense?

Fej 8y ago

It 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 US). Like others have said here, expect them to stomp the shit out of this. Unrelated: has anyone audited the contract?

umanwizard 8y ago
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.))
- omarchowdhury 8y ago
  I would assume Circle (backed by Goldman Sachs) is keeping the reserve dollars in segregated, FDIC insured bank accounts. Would be out of character and expected policy for a U.S. operation to not to.
- ur-whale 8y ago
  >is backed by the FDIC Isn't FDIC backing capped?
blhack 8y ago
It's pegged to the USD, isn't it?
- ur-whale 8y ago
  >It's pegged to the USD, isn't it? That's the intent. They may vastly over-estimate their ability to maintain the peg.

antiffan 8y ago

I’m trying to think of use-cases for trusted stable-coins. The obvious one is just another way to sell products — this has failed for Bitcoin due to volatility risk. One scenario I can think of is a decentralized e-reader and e-book marketplace: - you have an e-reader app that is capable of decrypting books stored somewhere, as long as the content was encrypted with your public key - authors publish their books to contracts that accept payments via an ERC20 stable-coin - the contract responds by encrypting a copy of the book with your public key and placing it at a location your e-reader can retrieve it Are there inherent advantages to a decentralized book store vs. Amazon though? Not sure…

scabarott 8y ago

I think stablecoins is where the cryptocurrency experiment is headed for the near & forseeable future. It's interesting to watch the experiment slowly give way to the reality of operating in the world at large. At least we still get some form of digital money. On another note, I think it's really concerning how much of a monopoly Coinbase is becoming in this space. They're probably the only corporate entity making any real (no-scam) money (in the US) and everyday they seem to be morphing into some kind of Goldman Sachs/Google/Microsoft hybrid of crypto-money.

MrEfficiency 8y ago
I would agree for non bitcoin cryptocurrency. Bitcoin has already established itself as a worldwide currency/store of value. Outside of bitcoin, smart coins failed due to their inability to scale. Bitcoin copy pastes or centralized currency coins are useless, day traders were obsessed and let these gain popularity. I do not expect these to last. Privacy coins have a chance to survive, but they will likely need to fix scaling issues. >Coinbase monopoly Give it less than 1 year, this board knows that development takes time. Feburary this year we were told by the US government that crypto was not going to be banned. This was huge news for everyone that had crypto for the last few years.

deleted 8y ago

[deleted]

anders94 8y ago

Hi, I'm Anders Brownworth, Chief Evangelist at Circle. I'm happy to answer any questions on USD Coin, CENTRE or Circle. We're also hiring! See https://circle.careers/ https://circle.careers/

jdoliner 8y ago
Does Circle keep enough dollars on hand to buy back every USDC? Or do you run a fractional reserve? How much money is that total? What do you do if you have as many USDCs in circulation as you have dollars? Stop issuing them?
- anders94 8y ago
  Circle holds one dollar for every dollar minted, we do not run a fractional reserve. The CENTRE Consortium holds minters (of which Circle is one) to strict auditing requirements. While this information is regularly published, you can see all minting and burning operations (as well as all transfers and other token operations) in realtime on the Ethereum blockchain. See etherscan: https://etherscan.io/address/0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48#events https://etherscan.io/address/0xa0b86991c6218b36c1d19d4a2e9eb... There are always as many USDCs in circulation as there are fiat dollars backing them up in traditional bank accounts. The only way minters produce more in a 1 to 1 manner is if someone wires traditional dollars in. Likewise, Circle will burn USDCs in a 1 to 1 manner as requests for traditional fiat dollar withdrawals are processed.
  - jdoliner 8y ago
    Thanks for the quick answer, this all makes sense. Does this get limiting at all, in terms of wanting to mint new coins and not having the capital to do so?
    - minderasure 8y ago
      That's like saying isn't it a bummer I cant just print money out of thin air to buy stuff. The whole point is to give people faith and trust in the stablecoin exactly because thie issuance process relies on locking up 1 USD.

sgondala2 8y ago

How can stable coin ever maintain the price? People can still speculate and sell it for more than a $, and buyers can buy it for more than a $.

loeg 8y ago
Traders, including HFT, are incentivized by the underlying value to keep the bid/ask spread very tight.
- sgondala2 8y ago
  Isn't this the same for any coin? Is making a stable coin as simple as naming it a 'stable' coin ?
  - loeg 8y ago
    You could ask the same question about any security. Yes, traders in general are incentivized to bid/ask near the actual value of the underlying security. The difference between securities in the abstract and a trustworthy, 100% reserve stablecoin is that the value of the latter is both known ($1) and stable (at least in USD terms). Yeah, stablecoins really are as simple as naming it a stable coin and pledging 100% real currency backing, so long as you can convince traders you are trustworthy. E.g., I have some confidence Coinbase is trustworthy; I have zero confidence Bitfinex is trustworthy.

nickthemagicman 8y ago

Is there like a large bank account somewhere that will hold al the 'dollars' backing the billions of USDC? How is this implemented?

sitepodmatt 8y ago
That's the idea, but previous stable coins have had trouble proving such and met a lot of community rejection (deservedly).

oropolo 8y ago

"Digital dollars?" We already have that -- it's called the US Dollar. Only 10% of the USD money supply is in physical paper or coin form. I receive my wages electronically and pay my mortgage, car payment, insurance, student loan, and buy groceries and entertainment without ever touching printed/minted money. And I suspect I'm in the majority on this point.

DINKDINK 8y ago
Digital dollar != a programmable digital dollar. It's like bitcoin, but will all the downsides of the dollar (endlessly inflating) + all the fragility and throughput constraints and centralization risks of ethereum.

viach 8y ago

How is that different from PayPal?

Animats 8y ago

OK. So how does the backing of this "stablecoin" work? Here's the website: https://www.centre.io/usdc https://www.centre.io/usdc Here's the whitepaper: https://www.centre.io/pdfs/centre-whitepaper.pdf https://www.centre.io/pdfs/centre-whitepaper.pdf There's very little about who actually has custody of the paid-in money and what guarantees it gets paid out if "stablecoin" outflow exceeds inflow. The "smart contract" machinery doesn't really do much about that part. Tether has been vague about that, too. Tether has been trading at a discount to the dollar, lately about 3-5%.[1] The usual failure mode is that whoever has custody of the money starts investing it. They don't have to pay the profits to the coin holders. Then they start making risky investments. Then they lose money. Then they start faking it. In the real brokerage world, they go to jail for speculating with customer funds. [1] https://cryptocoincharts.info/pair/usdt/usd/kraken/1-month https://cryptocoincharts.info/pair/usdt/usd/kraken/1-month

lucio 8y ago

Then next great "innovation" is to speed-up transactions for USDC by using a centralized server. /s

alcio 8y ago

It's funny that the USDC website doesn't list the main use of stablecoins (especially Tether) these days: arbitrage. When moving fiat between two exchanges can take days and flag your accounts for suspicious activity, moving the same value using Tether is much much faster (~30 mins to 1 hour). If one observes how does USDT flows, you'll find that it flows between the 3 or 4 major exchanges that use it, with almost no use elsewhere: no major wallets, no merchant acceptance, etc..

simonebrunozzi 8y ago

I still don't understand what's the "underlying technology". They call it a Blockchain, is it a permissioned Blockchain?

mehmeta 8y ago

The main problem with fiat backed stablecoins is that in addition to smart contract/theoretical security, you now have to also trust the procedural security of the entity issuing the asset. A collateralized stablecoin like Maker/Dai doesn't have that additional attack vector. For example, if the keys issuing the USDC has ever been compromised, new assets can be issued instantly by an attacker, compromising fungibility and causing other problems. Whereas if Maker/Dai smart contract proves secure over time, there's no centralized issuing entity/keys to compromise. Afaik the only centralized privilege controlled by MakerDAO is the global settlement, which merely refunds everyone their ether.

chemmail 8y ago
The problem with stablecoins, there is no such thing as a stable coin.
- QML 8y ago
  Whats the difference between a stablecoin and an IOU?
  - mehmeta 8y ago
    Both fiat backed assets as well as collateralized assets pegged to fiat money are called stablecoins, because they are meant to represent units of fiat money, and therefore "stable" relative to fiat. Fiat backed stablecoins fit the definition of an IOU better, since they are cryptographic promises to pay the bearer by centralized issuing entities. Whereas collateralized stablecoins are not IOUs, they are effectively loans on other cryptoassets you deposit in a smart contract (ether, in Maker/Dai's case).

sitepodmatt 8y ago

There is a lot of negativity on this but it must be more preferable to the Tether train wreck, the backing alone of Circle and Coinbase puts this on another level in terms of legitimacy. There is certainly a market for it, given there's 2billion of Tether in ~circulation (although who knows how much is actually backed by US$).

Paladiamors 8y ago

I've taken a look at the many threads happening here and a large number of people discussing the "worthlessness" of the having a stable coin because of the lack of volatility vs the USD. I'm actually quite interested in the outcome of this, especially because of transaction fees for credit card payments are so high. For some places in Asia, Japan in particular has credit card transaction fees of in the 3.6% range and going up to 4.5% for international cards. For businesses selling services in the $2500 range, just at 3.6% of this transaction becomes $90 in fees just for a single transaction. Which, I think, is quite high just for moving a digital asset around. While the prospects of "trading" this asset might not be as interesting, the potential for far lower transaction fees for people running a business seems very attractive to me.

vesak 8y ago

My virus/malware checker marks this blog as harmful.

ur-whale 8y ago

Long 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.

ur-whale 8y ago

IMO, this is just yet another crypto exchange trying to solve their day to day liquidity headaches, with some sugar sprinkled on (programmable USD). In doing so, I think they gravely underestimate the kind of meat-grinder they're putting their hand in (as in: the kind of liability they're taking on).

NoblePublius 8y ago

Can someone please explain the functional superiority of this over, say, a Venmo balance?

devmeplease 8y ago
It uses blockchain technology to handle transferring funds as apposed to something like Visa.
- NoblePublius 8y ago
  Visa processes transactions much faster, is accepted universally, has AML/fraud/chargeback insurance, and costs about 2.4% of transaction volume. This has none of those and transaction costs are TBD. I’m not trying to be a sceptic but I’m not yet convinced. “It’s decentralized” is not an argument unto itself and certainly not an argument of functional superiority. If anything it’s slower, harder to use, and more risky. I don’t care if my payment system is on Visa or AWS or a blockchain. I care that it’s fast and secure. I care that when a merchant defrauds me I get my money back.