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Can someone explain how a stablecoin is different from the fiat it's backed by, other than the name? Like why can't/shouldn't the government claim that a USD "
by dataflow 5y ago
Can someone explain how a stablecoin is different from the fiat it's backed by, other than the name?
Like why can't/shouldn't the government claim that a USD "coin" is just another name for... USD? And therefore maintaining a balance or reserve of it is equivalent to maintaining a bank account? (edit: or maybe I should say "fiat deposit account", which may not be FDIC insured)
- Raidion 5y agoOne is backed by the US government, but isn't able to be used on chain. One is backed by a bank account, and is able to be used on chain. Assuming the organization behind it appears to be good for the 1/1 USD/USDC exchange at all times that system works, but stuff gets weird if that peg ever moves.
- dataflow 5y agoThe "chain" isn't a Thing that somehow changes the nature of whatever it records though, right? If I ran a bank and wrote people's balances on bamboo, and executed transfers via carrier pigeons, that wouldn't suddenly change the currency, right? The government backing also seems beside the point - even for non-FDIC-insured entities, holding someone's money to give it back to them later makes their money become backed by you, but doesn't change the currency.
- dandanua 5y agoUSD banknote is a proof that USA as a country owes you a particular amount of good. USDT is a proof that some shady unregulated organization owes you an equivalent amount of good. "Backed by USD" is just a claim (99% lie, in reality).