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> What is more important is having a deep market on Binance It sounds like you are arguing that being popular is what matters more to being popular

by teej 7y ago

hanniabu 7y ago
Yes, and being where the users are being available for users to use it without performing KYC.
deleted 7y ago
[deleted]
lacker 7y ago
Well, yes. There are huge network effects for stablecoins. Let's go for a more specific example. Let's say that you hold one bitcoin on Binance, and you believe the price of bitcoin will go down today. You would like to exchange your bitcoin for dollars, and then tomorrow, exchange your dollars back into bitcoin. Ideally you would just use plain old US dollars. But since it's crypto, you can't. What you can have is a stablecoin. So which stablecoin should you use? There are two costs to using a stablecoin. Cost #1 is that when you exchange, you won't get the perfect rate. You'll have to pay some fee, and the precise exchange rate you get will depend on the liquidity of the market. Cost #2 is the chance that this stablecoin collapses in value while you're using it. For Tether, in my opinion cost #2 is high. All these dubious stories about the underpinning of Tether are true. That means the risk it collapses tomorrow are higher than the risks that other stablecoins collapse tomorrow. However, cost #1 is probably lower for Tether than it is for any other stablecoin. Because there are more traders operating in Tether, you get a better exchange rate. This is why Tether isn't just hype, it is providing real value to people through being the most popular stablecoin. Would we be better off in a world where the most popular stablecoin also had a solid financial backing? Yeah, I think so. But that isn't the same as saying that Tether has no utility today.
- sjy 7y ago
  > Ideally you would just use plain old US dollars. But since it's crypto, you can't. Because unbanked cryptocurrency exchanges are essentially in the business of money laundering. A service that facilitates illegal transactions has obvious value to any libertarian or criminal, but I’m not sure that counts as “providing real value to people.”
- vkou 7y ago
  Why not just use a reputable exchange, which actually lets you exchange your BTC into real dollars, as opposed to funny money dollars, like Coinbase? I understand why a money launderer wants to trade on an exchange which does not let them withdraw USD. But why would a normie (who, at some point, wants USD) want to do so?
  - lacker 7y ago
    This specific example is why you wouldn't want to exchange your BTC into real dollars. The user doesn't want to withdraw fiat dollars, they just want to exchange Bitcoins into a dollar proxy, then exchange back. Sometimes the cost of a less-liquid exchange is higher than the cost of using stablecoins instead of dollars.

> What is more important is having a deep market on Binance It sounds like you are arguing that being popular is what matters more to being popular

by teej 7y ago

> What is more important is having a deep market on Binance It sounds like you are arguing that being popular is what matters more to being popular

hanniabu 7y ago

Yes, and being where the users are being available for users to use it without performing KYC.

deleted 7y ago

[deleted]

lacker 7y ago

Well, yes. There are huge network effects for stablecoins. Let's go for a more specific example. Let's say that you hold one bitcoin on Binance, and you believe the price of bitcoin will go down today. You would like to exchange your bitcoin for dollars, and then tomorrow, exchange your dollars back into bitcoin. Ideally you would just use plain old US dollars. But since it's crypto, you can't. What you can have is a stablecoin. So which stablecoin should you use? There are two costs to using a stablecoin. Cost #1 is that when you exchange, you won't get the perfect rate. You'll have to pay some fee, and the precise exchange rate you get will depend on the liquidity of the market. Cost #2 is the chance that this stablecoin collapses in value while you're using it. For Tether, in my opinion cost #2 is high. All these dubious stories about the underpinning of Tether are true. That means the risk it collapses tomorrow are higher than the risks that other stablecoins collapse tomorrow. However, cost #1 is probably lower for Tether than it is for any other stablecoin. Because there are more traders operating in Tether, you get a better exchange rate. This is why Tether isn't just hype, it is providing real value to people through being the most popular stablecoin. Would we be better off in a world where the most popular stablecoin also had a solid financial backing? Yeah, I think so. But that isn't the same as saying that Tether has no utility today.

sjy 7y ago
> Ideally you would just use plain old US dollars. But since it's crypto, you can't. Because unbanked cryptocurrency exchanges are essentially in the business of money laundering. A service that facilitates illegal transactions has obvious value to any libertarian or criminal, but I’m not sure that counts as “providing real value to people.”
vkou 7y ago
Why not just use a reputable exchange, which actually lets you exchange your BTC into real dollars, as opposed to funny money dollars, like Coinbase? I understand why a money launderer wants to trade on an exchange which does not let them withdraw USD. But why would a normie (who, at some point, wants USD) want to do so?
- lacker 7y ago
  This specific example is why you wouldn't want to exchange your BTC into real dollars. The user doesn't want to withdraw fiat dollars, they just want to exchange Bitcoins into a dollar proxy, then exchange back. Sometimes the cost of a less-liquid exchange is higher than the cost of using stablecoins instead of dollars.