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Actually it can create fiat currency... in a roundabout way... The core of the coin ecosystem are the stable coins, which are generally pegged to fiat, but are

Actually it can create fiat currency... in a roundabout way... The core of the coin ecosystem are the stable coins, which are generally pegged to fiat, but are only backed by fractional reserves of cash. So the same USD can be recycled many times to buy Bitcoin. Not only that, but the stable coin operators are under no obligation to exchange their coins back to you for the pegged currency at face value. Tether is essentially an unregulated bank with nominal deposits totaling 73 billion USD, no obligation to pay depositors, a huge amount of minimally disclosed liabilities, and unaudited financial reserves. Ponzi was but an amateur.

oarabbus_ 5y ago
>Not only that, but the stable coin operators are under no obligation to exchange their coins back to you for the pegged currency at face value. >but are only backed by fractional reserves of cash. Maybe tether, but that isn't true of all, or even most stablecoins. Some stablecoins are overcollateralized rather than fractionally lent. As for the obligation, USDC for example is a fully audited system (by firm Grant Horton, who performs weekly audits), backed 1:1 by cash/cash equivalents and redeemable for $1 USD.
- scoopertrooper 5y ago
  USDC only has half the market cap of Tether. In fact, Tether has a higher market cap than all the other stable coins combined! So everything I've said is still true even if some operators are not as shady as the market leader. https://coinmarketcap.com/view/stablecoin/ https://coinmarketcap.com/view/stablecoin/ However, even USDC is still doing fractional reserve banking because an unspecified amount of its reserves are tied up in securities that have maturities up to 90 days, so they are still susceptible to a bank run. Though, granted they seem to be running a much more respectable operation than Tether. The third biggest stable coin BUSD, looks pretty shady as well. They release monthly audited accounts (good), but they're terse as hell. What liabilities do they have? Have these reserves been used as collateral in loans? Which banks are they in? What steps have the firm taken to audit these funds? No way to know, we're just get a terse list of aggregate numbers. https://paxos.com/attestations https://paxos.com/attestations

oarabbus_ 5y ago

>Not only that, but the stable coin operators are under no obligation to exchange their coins back to you for the pegged currency at face value. >but are only backed by fractional reserves of cash. Maybe tether, but that isn't true of all, or even most stablecoins. Some stablecoins are overcollateralized rather than fractionally lent. As for the obligation, USDC for example is a fully audited system (by firm Grant Horton, who performs weekly audits), backed 1:1 by cash/cash equivalents and redeemable for $1 USD.

scoopertrooper 5y ago
USDC only has half the market cap of Tether. In fact, Tether has a higher market cap than all the other stable coins combined! So everything I've said is still true even if some operators are not as shady as the market leader. https://coinmarketcap.com/view/stablecoin/ https://coinmarketcap.com/view/stablecoin/ However, even USDC is still doing fractional reserve banking because an unspecified amount of its reserves are tied up in securities that have maturities up to 90 days, so they are still susceptible to a bank run. Though, granted they seem to be running a much more respectable operation than Tether. The third biggest stable coin BUSD, looks pretty shady as well. They release monthly audited accounts (good), but they're terse as hell. What liabilities do they have? Have these reserves been used as collateral in loans? Which banks are they in? What steps have the firm taken to audit these funds? No way to know, we're just get a terse list of aggregate numbers. https://paxos.com/attestations https://paxos.com/attestations