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Stablecoins seem like they would achieve most of the goals of the original cryptocurrencies such as Bitcoin: - Decentralized transactions - 24/7 access - Low

• 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...
    • JumpCrisscross 8y ago
      > Decentralized transactions are distinct from decentralized issuance Dollars can be transacted, online and offline, through a variety of means ranging from at the Federal Reserve to totally de-centralised.
      • AboutTheWhisles 8y ago
        But they can't be used over the internet without permission. It could be argued that this requires permission as well since there will be 'know your customer' laws that surround buying and selling them, but to what extent they will require permission might remain to be seen.
      • Permit 8y ago
        Yes, but once I have acquired dollars and wish to send them to you I must involve a third party. Not involving that third party would be the sell here. I have no position in any cryptocurrency and am not trying to argue that USDC is better than USD. I'm just saying that stablecoins achieve most of the goals of a decentralized currency yet despite this they are not appealing to today's cryptocurrency community.
        • JumpCrisscross 8y ago
          > once I have acquired dollars and wish to send them to you I must involve a third party Cash. (There is no way to send electronic dollars without involving a third party, though more money is laundered using dollars and euros than cryptocurrencies. I'd argue leaving a permanent, public record of transactions is a poor price to pay for decentralized electronic transmission, particularly given the centralized issuer and guarantor problem.)
          • jabits 8y ago
            Ok, here’s a twenty in the palm of my hand...take it...oh wait...
• arcticbull 8y ago
  The US dollar already is exactly that with square cash or Venmo.
  • beaner 8y ago
    Except you can't send between the two. Isn't that so silly? You can send USDC to/from any wallet that implements it. This is a benefit of the blockchain, a protocol for money.
    • arcticbull 8y ago
      Only if both wallets implement it, isn’t it silly not all wallets support all stable coins? Nope, it isn’t. Moreover there seems to be a misunderstanding, square cash allows you to instantly move money between bank accounts, via your bank, have at it, totally interoperable because dollars.
      • Karrot_Kream 8y ago
        USDC is an ERC20 token, so the vast majority of wallets support it out of the box.
        • will_brown 8y ago
          Isn’t it funny CoinBase wallets don’t support ERC20 out of the box. They pick and choose what ERC20 tokens the support. Hey wouldn’t you know it they support their own stablecoin, but not others...pretty sure that’s the type of centralization cryptocurrency/Blockchain was trying to avoid.
          • leppr 8y ago
            Coinbase is trying to be the interface between the government-regulated world, and the code-regulated world. Of course they have to make more compromises to accommodate the side with the guns, than the immaterial one.
      • 8y ago
• simias 8y ago
  >I suppose the only drawback here is that they're issued from a centralized authority. Doesn't that defeat the whole purpose of cryptocurrencies though? After all this authority could selectively blacklist some coins from ever being converted back to their peg currency, effectively rendering them worthless, couldn't they? You couldn't easily launder it away because this authority could decide that if these coins are used in any transaction then the "bad" coins would contaminate the outputs proportionally to their amount in the inputs, so it would mean that people would double check their inputs not to get "bad" money. So it would be effectively like trying to spend fake dollar bills (except that the authenticity verification would be quick, automatic and completely impossible to fake). That means that on top of trusting the authority to fairly issue the coin you also give it the power to effectively censor transactions.
  • Permit 8y ago
    >Doesn't that defeat the whole purpose of cryptocurrencies though? Depends who you ask. The cryptocurrency community thus far have been happy to participate in ICOs in which cryptocurrencies are issued from a central authority.
    • jstanley 8y ago
      Don't get two distinct groups confused. The people buying ICOs are looking to get rich quick, the people interested in decentralised money are not buying ICOs.
  • leppr 8y ago
    It does, but "centralized cryptocurrencies" are still useful in that their similar technology makes interoperability with "proper" cryptocurrencies easier. It's money with a standard API. Whether the actual "value" part of it is centrally controlled or not, many tools made for one will work with the other.
• max76 8y ago
  In this case USDC isn't a store of value. The USD backing USDC stores the value. USDC is just a token for a USD.
• DSingularity 8y ago
  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...
  • orthecreedence 8y ago
    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 necessarily a stable store of value.
    • DSingularity 8y ago
      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.
• VMG 8y ago
  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 might not be backed by anything. It's not worth getting into FED policy here, but let's just say that a stablecoin denonminated in Venezuelan Boliviar is not attractive. > Stablecoins seem like they would achieve most of the goals of the original cryptocurrencies such as Bitcoin The original goals of cryptocurrencies (Bitcoin, to be precise) were exactly to avoid the problems that stablecoins have.
  • sjg007 8y ago
    I would imagine that the secret service would take ownership of the coins and then reissue them thus resolving their criminality.
    • VMG 8y ago
      Why would the Secret Service start help laundering money?
      • sjg007 8y ago
        Sorry I meant the Treasury. These would be seized digital coins.
      • jaycroft 8y ago
        Parent was probably implying that the Secret Service would sieze the tainted assets and the auction them off to new bidders, thus removing the taint for the new owner. the reason for the auction instead of just funding the treasury is that the USG deals in dollars, not in securities or other obligations or paper instrumnets. Compare the actions of the US Marshalls after siezing the Silk Road Bitcoins.
        • 8y ago
• rayvy 8y ago
  > Stablecoins seem like they would achieve most of the goals of the original cryptocurrencies such as Bitcoin Correct me if I'm wrong but Stablecoins sound like the opposite type of thing that Crypto-anarchist(s) behind Bitcoin tried to achieve. > I suppose the only drawback here is that they're issued from a centralized authority This reads in a hilarious way. Kind've like saying "I've found a perfect way to buy a car - I suppose the only drawback is that I'll actually be buying a lawn mower"
  • astrodust 8y ago
    How's my stable coin portfolio going to moon? That's the problem here.
    • lez 8y ago
      Look at MKR token, which is the governance token of Dai. It more than doubled in price during the last months. Because it's sparse and used up when making new Dai's (by collaterizing crypto assets). Buying MKR and supporting Dai might be a good strategy.
    • rocqua 8y ago
      Day trade between BTC and USDC rather than between BTC and USD. This can happen at many more exchanges because trading USDC is a lot easier than trading USD.
  • skybrian 8y ago
    Advocates of cryptocurrency tend to promote applications of it, not just promote decentralization as a platonic ideal. Supposedly this should make it more desirable to regular users. But for users attracted to applications who don't actually care about decentralization, a stable coin will seem better and will be hard to compete with. So, it seems like the true believers should be worried about having fewer persuasive arguments for adoption?
  • thaumasiotes 8y ago
    >> I suppose the only drawback here is that they're issued from a centralized authority > This reads in a hilarious way. Kind've like saying "I've found a perfect way to buy a car - I suppose the only drawback is that I'll actually be buying a lawn mower" Assume bitcoins are an attempt to bring back the older technology of coins, but on the internet. Coins are issued by a central authority, though that isn't necessarily a large part of their value. (Even when coins are made of precious metals, their standardization does increase their value somewhat over their pure value by weight.) The problem with USDC isn't that it's issued by a central authority. That is an asset, in that it allows for a more stable value. The problem is that you can't transfer the coins without recognition from USDC. If you've got a golden dinar, you can give it to someone else no matter what the Caliph would like to say about it.
• kolbe 8y ago
  Unfortunately, its value is inalienably attached to the dollars that it can be redeemed for. And so long as Coinbase has to take legitimate AML and KYC measures, many people who need access to the redemption market will not have it (e.g. poor families using it for international remittances, and cartels).
  • arcticbull 8y ago
    Did you know international remittances are already really, really cheap? Check out compareremit.com if you don’t believe me, they rank different services. Some corridors like USD-INR are almost mid-market, zero fees. I thought this was a huge opportunity too until I researched it.
• alistproducer2 8y ago
  This is wrong on several levels. Decentralization was not for transactions, it is for censorship resistance. These exchange stable coins fail this requirement. As anyone who has been licked out of an exchange account knows, your funds are never yours when they're on an exchange, much less if the only place to redeem those coins is a place that has locked you out. Your observations about the community is flawed. Many are just speculators but there are many, like myself, who care about the technology and the core principles. For the latter, you need to be reading a place like bitcointalk.
  • Permit 8y ago
    >For the latter, you need to be reading a place like bitcointalk. BitcoinTalk is the launchpad of virtually every ICO that has violated these core principles. I am very skeptical of your claim that it's a haven for those who care about the technology and its principles when they have boards solely dedicated to announcement of new ICOs: https://bitcointalk.org/index.php?board=159.0 https://bitcointalk.org/index.php?board=159.0
    • jki275 8y ago
      bitcointalk is the canonical location for most of the discussion regarding cryptocurrency and has been for years. They have a lot of ancillary boards, but the foundation of the board is the tech.
  • stilley2 8y ago
    The article says USDC is an ERC20 coin, which means you can keep it in your own wallet (i.e., not the exchange). You are still trusting the centre consortium to maintain the coins value.
    • lacker 8y ago
      According to USDC's documentation, accounts can also be frozen by a 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 process. Reserves associated with USDC balances held on blacklisted addresses may be wholly and permanently unrecoverable. https://support.usdc.circle.com/hc/en-us/articles/360016060352-Can-a-customer-send-USDC-tokens-to-any-address-Can-addresses-be-blacklisted- https://support.usdc.circle.com/hc/en-us/articles/3600160603...
• gwbas1c 8y ago
  > Despite this, no one on Twitter[1] seemed excited Because most people think that in order to solve the problem of a cryptocurrency, they have to also solve the problem of who gets money when you print it. Far too many people conflate the need for electronic cash versus the need to improve upon how systems like the Federal Reserve and their International equivalents work. Honestly, as a software engineer who understands some basic economics, I think cryptocurrency becomes far more interesting when it's not trying to solve the problem of who gets money when it's printed. I also think that the Federal Reserve, and its international equivalents, work very well for me! I think that trying to come up with a currency that improves upon the Federal Reserve System, or equivalent, needs to be a separate technical problem than just trying to have an electronic form of cash. In my opinion, most of the people who were excited about cryptocurrency were scam artists, the kind of people who just don't understand how money really works, or engineers who don't really understand scaling.
  • wcoenen 8y ago
    > I think cryptocurrency becomes far more interesting when it's not trying to solve the problem of who gets money when it's printed This was not the goal of bitcoin. The goal was to remove the need for trusted intermediaries from electronic payments. https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf
    • gwbas1c 8y ago
      The primary goal of Bitcoin was to be an experiment.
    • hndamien 8y ago
      Thats true, but in order to make that work it actually needed to solve both problems.
  • tomputer 8y ago
    If there is a need for electronic cash backed by USD and controlled by a central party, why use crypto/blockchain at all? To solve that problem a central database on a controlled network could do just fine?
• russdpale 8y ago
  Stablecoins do absolutely nothing that bitcoin does. In fact it is just the opposite. Not to be rude, but you have a fundamental misunderstanding of the technology.
• lacker 8y ago
  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 process. Reserves associated with USDC balances held on blacklisted addresses may be wholly and permanently unrecoverable. https://support.usdc.circle.com/hc/en-us/articles/360016060352-Can-a-customer-send-USDC-tokens-to-any-address-Can-addresses-be-blacklisted- https://support.usdc.circle.com/hc/en-us/articles/3600160603... How bad this is is yet to be seen. Anyone who has experience with PayPal freezing their account knows that it can be very frustrating when a company freezes your accounts for some unknown reason and then does not communicate with you.
  • hudon 8y ago
    Same drawback applies to Bitcoin. Send BTC from Coinbase to a blacklisted entity and see how quickly CB, Gemini, etc. shut down your accounts. Then you’re left with your local client but you can’t trade anywhere... and speculation is crypto’s only use case today.
    • lawn 8y ago
      > but you can’t trade anywhere Just trade on all the other less regulated exchanges. Or localbitcoin. Or, you know, buy stuff. > and speculation is crypto’s only use case today. Or you buy stuff... For example: * Webhallen (huge Swedish online shop) * scan.co.uk (uk based computer online shop) * purse.io (buy stuff from amazon) * fastmail (emails) * VPN/VPS/domains from various providers * darknetmarkets
      • skybrian 8y ago
        If they don't use the blacklist, will they get added to the blacklist? (Is it viral?)
        • 8y ago
• tim333 8y ago
  There is a decentralized stablecoin, DAI that's backed by Ethereum holdings and smart contracts. I think if ETH is doing ok you can swap a DAI for $1 worth of ETH. If it ETH crashes I presume you get given the ETH which you can sell. It relies on 'oracles' to give the ETH/USD exchange rate to the smart contracts. https://medium.com/@james_3093/the-dai-stablecoin-is-a-game-changer-for-ethereum-and-the-entire-cryptocurrency-ecosystem-13fb412d1e75 https://medium.com/@james_3093/the-dai-stablecoin-is-a-game-...
• wtfrmyinitials 8y ago
  > they're (stablecoins) are issued from a centralized authority. Nitpick: there is at least one decentralized stablecoin: Dai https://makerdao.com/ https://makerdao.com/
• tlrobinson 8y ago
  > I suppose the only drawback here is that they're issued from a centralized authority. The lack of a central authority was the entire reason Bitcoin was successful where previous cryptocurrencies were not.
• leppr 8y ago
  > I suppose the only drawback here is that they're issued from a centralized authority. That's only true for this type of "vouchers" stablecoins, where coins are redeemable for some physical asset. There are whole other classes of stablecoins that seek to achieve price stability through decentralized means, either using other cryptocurrencies as collateral[1], or using algorithmic bond-issuance mechanisms[2]. Multicoin did an in-depth article about this back in January[3]. >Despite this, no one on Twitter seemed excited. [...] A cryptocurrency that stays the same value is not very interesting to traders and therefore most of the cryptocurrency community. That's the thing, the "cryptocurrency community" is currently overwhelmingly comprised of loud investors and ICO marketers. The way smaller and discreet nucleus of researchers, developers and idealists, you don't see replying to Coinbase tweets and hanging out in Reddit. There's no mainstream usecase for cryptocurrencies as they are now, so the "enthusiastic users" community you see in more established fields doesn't really exist yet. [1] https://vimeo.com/247715549 https://vimeo.com/247715549 [2] https://www.basis.io/basis_whitepaper_en.pdf https://www.basis.io/basis_whitepaper_en.pdf [3] https://multicoin.capital/2018/01/17/an-overview-of-stablecoins/ https://multicoin.capital/2018/01/17/an-overview-of-stableco...
• anonytrary 8y ago
  > 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. I think the key difference is that Bitcoins are mined into existence according to a fixed mathematical law, whereas stablecoins are backed by something which can be printed into existence whenever the central authority pleases.
• blueprint 8y ago
  How is it decentralized if the stablecoin must be pinned to a rate? Where do you get the rate from? Does this involve an oracle problem?
• paulgrant999 8y ago
  you know why banks are so heavily regulated? a distributed systems of ledgers, where banks attested to the amount of cash, in their vaults. ... ... ...
• hndamien 8y ago
  The main thing that it doesn't address is you need to trust a central authority (as you mentioned) and it is pegged to an inflationary money.
• josephagoss 8y ago
  > most of the goals of the original cryptocurrencies such as Bitcoin Satoshi's main reason for developing Bitcoin is the economic model, the other stuff just facilitates this model. This is one of the reasons why Bitcoin has the value that it does, because the supply emission curve is known and cannot be altered. Mistaking the things that you list as core to Bitcoin's purpose is missing the bigger picture about why Bitcoin exists. The supply emission curve is key to understanding Bitcoin and the reason people hold it.
• Pristina 8y ago
  >I suppose the only drawback here is that they're issued from a centralized authority. you know what they say: "those who do not remember the past are doomed to repeat it". >A cryptocurrency that stays the same value is not very interesting to traders and therefore most of the cryptocurrency community. the reason most of the cryptocurrency community is traders, is because of the price volatility. now that that is fixed, people can actually use crypto-currency as a currency and hopefully we can have an actual useful tool for an economy rather than a FOMO-fueled get-rich-quick hype-machine.
• TallTales 8y ago
  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.
• corv 8y ago
  Except stable coins don’t work. No currency peg has ever been defended indefinitely. And pegging crypto to USD doesn’t solve the problem it was created for in the first place.
• imaginenore 8y ago
  Except on of the most attractive aspects of most cryptocurrencies: limited supply. Also, USD is not a good store of value. It lost 97% of its purchasing power in 100 years.
• kakarot 8y ago
  I don't know the exact numbers, Eternal September has probably happened two or three times in the cryptocurrency community by now, but there was a time where the majority of people involved didn't give a rats ass about their "investment", but the ideology behind cryptocurrency itself. If the coins weren't issued from a central authority, I would welcome the USDC stablecoin as an addition to the crypto market.
• mettamage 8y ago
  I hope merchants will be excited. I kind of am. I'm excited about the ease of integration.
• spinny 8y ago
  It's worth mentioning the KUSD project by Kowala Tech https://www.kowala.tech/ https://www.kowala.tech/ which is a stablecoin that tries to achieve the 1:1 price relation by controlling the coin supply depending on the exchange price (by using oracles).