14 ms·

Though I'm not sure why so many people were hinged about Tether (albeit the average solidity of its peg meant it's legit); the positive effect of this is that w

by csomar 7y ago

Though I'm not sure why so many people were hinged about Tether (albeit the average solidity of its peg meant it's legit); the positive effect of this is that we now have lots of different stable USD coins: Coinbase, Gemini, TrueUSD, Binance all have stable coins with a total cap of over $1bn. Sure it's much less than TetherUSD $6.3bn but it's roughly 16%. Much better than the total monopoly of tether two years ago.

TylerE 7y ago
Because when the whole house of tulips inevitably comes crashing down, the stable coins are gonna be worthless too. So people will take 99.99999999% losses and not 60-80%. Real dollars go in.... IOUs out of a bull's behind come out.
- csomar 7y ago
  Coinbase/Gemini USD are US regulated. So... no.
  - TylerE 7y ago
    Because regulation worked SO WELL in numerous cases anyone could name (Enron, Worldcom, Authur Anderson, Lehman Brothers...)
    - product50 7y ago
      Yeah - everything is fucked so why do anything? Lets just sit here and criticize everything. And that is the life we choose to live.
      - TylerE 7y ago
        That's pointlessly reductionist. Just because we can't do perfect means we should look at a steaming pile of dogshit like it's filet mignon. The short term solution to "everything's fucked" is to stop making it even more fucked.
        product50 7y ago
        Glad that you are able to figure out the shortcomings in your comments. Be constructive vs. generalizing a few negative examples and taking a defeatist attitude to things.
        dwaltrip 7y ago
        > The short term solution to "everything's fucked" is to stop making it even more fucked. That's not a solution, that's a vague sentiment.
        qotgalaxy 7y ago
        Are you arguing with yourself?
    - arcticbull 7y ago
      Picking out a small handful of obvious failures is not a useful exercise for or against regulation. Regulation has had numerous incredibly life-chantingly beneficial effects on our lives. Thanks to the EPA, the rivers no longer literally catch fire. I'd trade one Enron for lakes of water instead of lakes of fire any day. Regulation can be good, regulation can be bad, how you do it matters far more.
      - TylerE 7y ago
        I'm not saying it's a bad thing - just that I don't trust it to cover my ass.
        arcticbull 7y ago
        I trust it to keep the rivers from catching fire, and planes from falling out of the sky, and the front seat from falling through the bottom of my car.
  - ac29 7y ago
    Given this all-caps disclaimer, I wouldn't exactly be reassured that USDC would be worth anything in the event Coinbase went out of business: "USDC IS NOT LEGAL TENDER. USDC IS A DIGITAL CURRENCY AND COINBASE HAS NO RIGHT TO USE ANY USDC YOU HOLD ON COINBASE. COINBASE IS NOT A DEPOSITORY INSTITUTION, AND YOUR USDC WALLET IS NOT A DEPOSIT ACCOUNT. YOUR USDC WALLET IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC)." (https://help.coinbase.com/en/coinbase/getting-started/general-crypto-education/usd-coin-rewards-faq.html https://help.coinbase.com/en/coinbase/getting-started/genera...)
    - shawabawa3 7y ago
      If you read the FAQ, Coinbase doesn't even issue USDC, Circle does, so Coinbase going out of business won't affect the balances in Circle's bank account or the redeem-ability of USDC. They also actually publish regular audits unlike Tether https://help.coinbase.com/en/coinbase/getting-started/general-crypto-education/usd-coin-usdc-faq.html https://help.coinbase.com/en/coinbase/getting-started/genera...
    - gruez 7y ago
      >Given this all-caps disclaimer, I wouldn't exactly be reassured that USDC would be worth anything in the event Coinbase went out of business: But every line in the disclaimer are probably applicable to bond/USD ETFs as well, but people aren't exactly fleeing from those.
      - ac29 7y ago
        Bond holders have a certain legal right to claims on assets of a company that becomes insolvent - I'm not sure what legal rights USDC holders would have. But either way, I think most people would not tend to view something like USDC as a bond (in which the bond holder is a creditor to the bond-issuing organization, with the associated risk-adjusted return on capital), but more like cash.
        GoblinSlayer 7y ago
        Should the assets of the company provide full backing of the bonds?
  - arcticbull 7y ago
    Chuck-E-Cheese tokens are US regulated so... my point being of course that just because something is under US jurisdiction doesn't make it "good as gold" so to speak. The structure of the underlying implement is what matters.
- chrischen 7y ago
  Bitcoin is the preferred payment method of extortionists and criminals world-wide. Accepted everywhere cash is. So yes, it has had a legitimately illegitimate use case.
  - toomim 7y ago
    No it's not. That's a common misconception, but the studies show that USD is used about 100x more than cryptocurrencies for crime. This is because: 1. Criminals don't want their activities to be tracked on a public ledger. Cash is anonymous. Bitcoin is not. 2. Criminals already have money laundering systems in-place, and relationships with corrupt bankers. 3. Cash is accepted at more places. So it's more useful to have. We're talking trillions of dollars in USD crime here. It's not even close.
    - microtherion 7y ago
      > studies show that USD is used about 100x more than cryptocurrencies for crime That's a massively higher share for cryptocurrencies than in legitimate transactions, isn't it?
      - bb88 7y ago
        I was curious about that too. The US Treasury thinks that $300bn is laundered every year. Then ciphertrace thinks $2.5bn is laundered through crypto currencies. While BTC is tracked between wallets and that's easily measured, it's unclear how to measure wallets being transferred between people.
    - bb88 7y ago
      > Cash is anonymous. Bitcoin is not. There's a non zero chance that your criminal extortion scheme won't end up with bill serial numbers tracked by federal authorities. Hence that's probably why 97% of ransomware uses BTC.
      - mirimir 7y ago
        That's quite the endorsement, there. Before Bitcoin, they were using stuff like Walmart giftcards.
SkyMarshal 7y ago
> the positive effect of this is that we now have lots of different stable USD coins: Coinbase, Gemini, TrueUSD, Binance all have stable coins with a total cap of over $1bn. "Stablecoins" are not stable. How many times do we have to learn this lesson in finance? The probability distribution underlying this stuff is not what stability proponents think it is. They will be stable until they aren't, and then they will blow up. Chasing stability in inherently unstable systems is a fool's game.
- product50 7y ago
  Read more about USDC and then come back. USDC is literally backed 1-1 with USD in a bank - by definition.
  - fredophile 7y ago
    I'll believe that when I see an audit.
    - occamrazor 7y ago
      The audit for March 2020 is here: https://www.centre.io/pdfs/attestation/grant-thornton_circle_usdc_reserves_20200413.pdf https://www.centre.io/pdfs/attestation/grant-thornton_circle...
      - fredophile 7y ago
        Thanks. That does make it seem more credible than some other crypto currencies.
  - SkyMarshal 7y ago
    There are at least three reasons why USDC could become unstable: 1. Pegged value currencies are subject to Soros-breaking-the-Pound style attacks. 2. USDC is based on Ethereum, a first-generation cryptocurrency with numerous design flaws, at both the protocol and scripting language level. On top of that is an increasingly complex network of DeFi apps which can be exploited in sophisticated ways, as we saw with recent multi-part hack across several DeFi apps. 3. The US Dollar itself may be heading into a period of instability, given the massive US Govt debt and Federal Reserve operations. You can stick your head in the sand and pretend stablecoins are stable, or you can acknowledge they’re more likely one more in a long history of financial folly.
AgentME 7y ago
While you're mentioning stable coins, it might be worth mentioning DAI, which unlike the others, is decentralized and managed by a public smart contract, instead of being centralized and managed by a single company which could lie about its reserves and could choose or be forced to shut down.
- latchkey 7y ago
  There is one small issue with DAI in my eyes. It has been trading for a premium, while at the same time you can't make a profit from owning it because the spread is always an issue. I am testing an automated contract that does 3 way arbitrage between USDC/USDT/DAI and it has never once crossed over to DAI, while USDC/USDT cross each other enough to trigger a trade, 1-2 times a day.
koheripbal 7y ago
Not a single one of those cryptos that claim to peg to the dollar is fully capitalized. Pricing a "market cap" for a crypto when only a tiny percentage of it is trading in the market is not a realistic measure of value.
- chii 7y ago
  i agree. A more realistic value is definitely the sum total of transactions conducted using said coin. Counting market cap as value is like counting the market cap of WeWork using the funding valuation they got for a small % of equity.
  - jkhdigital 7y ago
    Bitcoin is a monetary asset with no underlying fundamental value. Transaction volume is meaningless. The only thing that matters is what someone is willing to pay for it.
    - Vindicis 7y ago
      Not to mention that it's always just a hairsbreadth away from being obliterated by Governments if they ever choose to.
      - mirimir 7y ago
        As I recall, Bitcoin was designed for resilience to government pressure. But that's never been tested, in any substantive way. I'm not aware of any reason why the Bitcoin network couldn't switch to VPN-level overlay networks. Using Tor would be somewhat problematic, given the limited bandwidth. But I'm pretty sure that it'd be doable. Other options include Orchid and Loki. Mining could be an interesting issue. Government pressure could render large-scale mining operations unworkable. But as I understand it, the Bitcoin network could function just as well with far^N less mining capacity. Difficulty would just decrease with less mining competition. And that would mitigate the key negative impact of electricity usage.

by csomar 7y ago

TylerE 7y ago

Because when the whole house of tulips inevitably comes crashing down, the stable coins are gonna be worthless too. So people will take 99.99999999% losses and not 60-80%. Real dollars go in.... IOUs out of a bull's behind come out.

csomar 7y ago
Coinbase/Gemini USD are US regulated. So... no.
- TylerE 7y ago
  Because regulation worked SO WELL in numerous cases anyone could name (Enron, Worldcom, Authur Anderson, Lehman Brothers...)
  - product50 7y ago
    Yeah - everything is fucked so why do anything? Lets just sit here and criticize everything. And that is the life we choose to live.
    - TylerE 7y ago
      That's pointlessly reductionist. Just because we can't do perfect means we should look at a steaming pile of dogshit like it's filet mignon. The short term solution to "everything's fucked" is to stop making it even more fucked.
      - product50 7y ago
        Glad that you are able to figure out the shortcomings in your comments. Be constructive vs. generalizing a few negative examples and taking a defeatist attitude to things.
      - dwaltrip 7y ago
        > The short term solution to "everything's fucked" is to stop making it even more fucked. That's not a solution, that's a vague sentiment.
      - qotgalaxy 7y ago
        Are you arguing with yourself?
  - arcticbull 7y ago
    Picking out a small handful of obvious failures is not a useful exercise for or against regulation. Regulation has had numerous incredibly life-chantingly beneficial effects on our lives. Thanks to the EPA, the rivers no longer literally catch fire. I'd trade one Enron for lakes of water instead of lakes of fire any day. Regulation can be good, regulation can be bad, how you do it matters far more.
    - TylerE 7y ago
      I'm not saying it's a bad thing - just that I don't trust it to cover my ass.
      - arcticbull 7y ago
        I trust it to keep the rivers from catching fire, and planes from falling out of the sky, and the front seat from falling through the bottom of my car.
- ac29 7y ago
  Given this all-caps disclaimer, I wouldn't exactly be reassured that USDC would be worth anything in the event Coinbase went out of business: "USDC IS NOT LEGAL TENDER. USDC IS A DIGITAL CURRENCY AND COINBASE HAS NO RIGHT TO USE ANY USDC YOU HOLD ON COINBASE. COINBASE IS NOT A DEPOSITORY INSTITUTION, AND YOUR USDC WALLET IS NOT A DEPOSIT ACCOUNT. YOUR USDC WALLET IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC)." (https://help.coinbase.com/en/coinbase/getting-started/general-crypto-education/usd-coin-rewards-faq.html https://help.coinbase.com/en/coinbase/getting-started/genera...)
  - shawabawa3 7y ago
    If you read the FAQ, Coinbase doesn't even issue USDC, Circle does, so Coinbase going out of business won't affect the balances in Circle's bank account or the redeem-ability of USDC. They also actually publish regular audits unlike Tether https://help.coinbase.com/en/coinbase/getting-started/general-crypto-education/usd-coin-usdc-faq.html https://help.coinbase.com/en/coinbase/getting-started/genera...
  - gruez 7y ago
    >Given this all-caps disclaimer, I wouldn't exactly be reassured that USDC would be worth anything in the event Coinbase went out of business: But every line in the disclaimer are probably applicable to bond/USD ETFs as well, but people aren't exactly fleeing from those.
    - ac29 7y ago
      Bond holders have a certain legal right to claims on assets of a company that becomes insolvent - I'm not sure what legal rights USDC holders would have. But either way, I think most people would not tend to view something like USDC as a bond (in which the bond holder is a creditor to the bond-issuing organization, with the associated risk-adjusted return on capital), but more like cash.
      - GoblinSlayer 7y ago
        Should the assets of the company provide full backing of the bonds?
- arcticbull 7y ago
  Chuck-E-Cheese tokens are US regulated so... my point being of course that just because something is under US jurisdiction doesn't make it "good as gold" so to speak. The structure of the underlying implement is what matters.
chrischen 7y ago
Bitcoin is the preferred payment method of extortionists and criminals world-wide. Accepted everywhere cash is. So yes, it has had a legitimately illegitimate use case.
- toomim 7y ago
  No it's not. That's a common misconception, but the studies show that USD is used about 100x more than cryptocurrencies for crime. This is because: 1. Criminals don't want their activities to be tracked on a public ledger. Cash is anonymous. Bitcoin is not. 2. Criminals already have money laundering systems in-place, and relationships with corrupt bankers. 3. Cash is accepted at more places. So it's more useful to have. We're talking trillions of dollars in USD crime here. It's not even close.
  - microtherion 7y ago
    > studies show that USD is used about 100x more than cryptocurrencies for crime That's a massively higher share for cryptocurrencies than in legitimate transactions, isn't it?
    - bb88 7y ago
      I was curious about that too. The US Treasury thinks that $300bn is laundered every year. Then ciphertrace thinks $2.5bn is laundered through crypto currencies. While BTC is tracked between wallets and that's easily measured, it's unclear how to measure wallets being transferred between people.
  - bb88 7y ago
    > Cash is anonymous. Bitcoin is not. There's a non zero chance that your criminal extortion scheme won't end up with bill serial numbers tracked by federal authorities. Hence that's probably why 97% of ransomware uses BTC.
    - mirimir 7y ago
      That's quite the endorsement, there. Before Bitcoin, they were using stuff like Walmart giftcards.

SkyMarshal 7y ago

> the positive effect of this is that we now have lots of different stable USD coins: Coinbase, Gemini, TrueUSD, Binance all have stable coins with a total cap of over $1bn. "Stablecoins" are not stable. How many times do we have to learn this lesson in finance? The probability distribution underlying this stuff is not what stability proponents think it is. They will be stable until they aren't, and then they will blow up. Chasing stability in inherently unstable systems is a fool's game.

product50 7y ago
Read more about USDC and then come back. USDC is literally backed 1-1 with USD in a bank - by definition.
- fredophile 7y ago
  I'll believe that when I see an audit.
  - occamrazor 7y ago
    The audit for March 2020 is here: https://www.centre.io/pdfs/attestation/grant-thornton_circle_usdc_reserves_20200413.pdf https://www.centre.io/pdfs/attestation/grant-thornton_circle...
    - fredophile 7y ago
      Thanks. That does make it seem more credible than some other crypto currencies.
- SkyMarshal 7y ago
  There are at least three reasons why USDC could become unstable: 1. Pegged value currencies are subject to Soros-breaking-the-Pound style attacks. 2. USDC is based on Ethereum, a first-generation cryptocurrency with numerous design flaws, at both the protocol and scripting language level. On top of that is an increasingly complex network of DeFi apps which can be exploited in sophisticated ways, as we saw with recent multi-part hack across several DeFi apps. 3. The US Dollar itself may be heading into a period of instability, given the massive US Govt debt and Federal Reserve operations. You can stick your head in the sand and pretend stablecoins are stable, or you can acknowledge they’re more likely one more in a long history of financial folly.

AgentME 7y ago

While you're mentioning stable coins, it might be worth mentioning DAI, which unlike the others, is decentralized and managed by a public smart contract, instead of being centralized and managed by a single company which could lie about its reserves and could choose or be forced to shut down.

latchkey 7y ago
There is one small issue with DAI in my eyes. It has been trading for a premium, while at the same time you can't make a profit from owning it because the spread is always an issue. I am testing an automated contract that does 3 way arbitrage between USDC/USDT/DAI and it has never once crossed over to DAI, while USDC/USDT cross each other enough to trigger a trade, 1-2 times a day.

koheripbal 7y ago

Not a single one of those cryptos that claim to peg to the dollar is fully capitalized. Pricing a "market cap" for a crypto when only a tiny percentage of it is trading in the market is not a realistic measure of value.

chii 7y ago
i agree. A more realistic value is definitely the sum total of transactions conducted using said coin. Counting market cap as value is like counting the market cap of WeWork using the funding valuation they got for a small % of equity.
- jkhdigital 7y ago
  Bitcoin is a monetary asset with no underlying fundamental value. Transaction volume is meaningless. The only thing that matters is what someone is willing to pay for it.
  - Vindicis 7y ago
    Not to mention that it's always just a hairsbreadth away from being obliterated by Governments if they ever choose to.
    - mirimir 7y ago
      As I recall, Bitcoin was designed for resilience to government pressure. But that's never been tested, in any substantive way. I'm not aware of any reason why the Bitcoin network couldn't switch to VPN-level overlay networks. Using Tor would be somewhat problematic, given the limited bandwidth. But I'm pretty sure that it'd be doable. Other options include Orchid and Loki. Mining could be an interesting issue. Government pressure could render large-scale mining operations unworkable. But as I understand it, the Bitcoin network could function just as well with far^N less mining capacity. Difficulty would just decrease with less mining competition. And that would mitigate the key negative impact of electricity usage.