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USDC is backed by Coinbase (USDC are issued by Centre, a joint venture of Coinbase and Circle if I'm not mistaken). And Coinbase is an HN unicorn. Everybody at

USDC is backed by Coinbase (USDC are issued by Centre, a joint venture of Coinbase and Circle if I'm not mistaken). And Coinbase is an HN unicorn. Everybody at Coinbase is known, it's operated from the US. Coinbase ain't anywhere, not even remotely, like tether/bitfinex. There totally exists a world in which USDT goes to 0 while USDC is still worth 1 USD.

endisneigh 5y ago
So your logic is that big, known entities can’t go bankrupt or be scams?
- jkhdigital 5y ago
  No, the logic is that it is less likely. Anyways, Coinbase allows on-demand conversion of USDC to USD so you really only have to hold the USDC (and Coinbase’s counterparty risk) for about a day for that process to complete. At some point that window might close but given that Coinbase is a publicly traded stock in the US and must report financials, there is quite a bit less risk compared to Tether.
  - marton78 5y ago
    Agreed, the risk that it goes bust by itself is less than that Tether goes bust. However, what we are taking about is repercussions of Tether going bust: how will it affect Coinbase if suddenly 69B are trying to get cashed out?
  - Asparagirl 5y ago
    Bernie Madoff was the chairman of the NASDAQ stock exchange. Being a known entity with cred doesn’t mean anything.
NelsonMinar 5y ago
It's like you never heard of the 2008/2009 financial crisis and how financial contagion works. Also Coinbase is not so pristine or pure. They were misleading customers with a gentler version of the same thing Tether did. "Coinbase Vowed Token’s All-Cash Backing; That’s Not True". https://www.bloomberg.com/news/articles/2021-08-11/coinbase-drops-promise-of-token-s-cash-backing-that-wasn-t-true https://www.bloomberg.com/news/articles/2021-08-11/coinbase-...
- jkhdigital 5y ago
  Doesn’t matter that much whether it’s “100% backed” or whatever. The time it takes to (1) send USDC to Coinbase, (2) convert that USDC to USD, and (3) withdraw the USD to a bank account is short enough (less than a day by wire transfer) that the counterparty risk is pretty darn minimal.
  - jaggederest 5y ago
    Until it's not. Part 1 and 2 of your list require Coinbase's implicit consent and cooperation, and if there is a bank run on USDT, that cooperation may be in short supply. I would bet money that Coinbase has a button on their admin panel that says "Pause redemption of USDC" or equivalent, so you're just hoping they don't push that button in extremis. I find that silly, if what we're hypothetically betting on is that the crypto system will be in extremis.

endisneigh 5y ago

So your logic is that big, known entities can’t go bankrupt or be scams?

jkhdigital 5y ago
No, the logic is that it is less likely. Anyways, Coinbase allows on-demand conversion of USDC to USD so you really only have to hold the USDC (and Coinbase’s counterparty risk) for about a day for that process to complete. At some point that window might close but given that Coinbase is a publicly traded stock in the US and must report financials, there is quite a bit less risk compared to Tether.
- marton78 5y ago
  Agreed, the risk that it goes bust by itself is less than that Tether goes bust. However, what we are taking about is repercussions of Tether going bust: how will it affect Coinbase if suddenly 69B are trying to get cashed out?
- Asparagirl 5y ago
  Bernie Madoff was the chairman of the NASDAQ stock exchange. Being a known entity with cred doesn’t mean anything.

NelsonMinar 5y ago

It's like you never heard of the 2008/2009 financial crisis and how financial contagion works. Also Coinbase is not so pristine or pure. They were misleading customers with a gentler version of the same thing Tether did. "Coinbase Vowed Token’s All-Cash Backing; That’s Not True". https://www.bloomberg.com/news/articles/2021-08-11/coinbase-drops-promise-of-token-s-cash-backing-that-wasn-t-true https://www.bloomberg.com/news/articles/2021-08-11/coinbase-...

jkhdigital 5y ago
Doesn’t matter that much whether it’s “100% backed” or whatever. The time it takes to (1) send USDC to Coinbase, (2) convert that USDC to USD, and (3) withdraw the USD to a bank account is short enough (less than a day by wire transfer) that the counterparty risk is pretty darn minimal.
- jaggederest 5y ago
  Until it's not. Part 1 and 2 of your list require Coinbase's implicit consent and cooperation, and if there is a bank run on USDT, that cooperation may be in short supply. I would bet money that Coinbase has a button on their admin panel that says "Pause redemption of USDC" or equivalent, so you're just hoping they don't push that button in extremis. I find that silly, if what we're hypothetically betting on is that the crypto system will be in extremis.