12 ms·
The entire concept of a "stablecoin" reminds me a lot of something from SIGBOVIK 2014. Keep in mind, this was written in 2014, before any stablecoins actually e
by alexb_ 4y ago
The entire concept of a "stablecoin" reminds me a lot of something from SIGBOVIK 2014. Keep in mind, this was written in 2014, before any stablecoins actually existed, and that SIGBOVIK is supposed to be a joke conference where people present extremely silly ideas as if they were real breakthroughs.
> DollarCoin: We propose skipping the middleman and providing direct proof-of-dollar with a blockchain that consists of videos of burning US $1 notes. Each video will be unique as the hash of every block header is required to be written on the dollar bill to be burnt; the block header includes the previous block’s hash, which means that each block is forced to build on every previous block, forming a valid blockchain
http://sigbovik.org/2014/proceedings.pdf http://sigbovik.org/2014/proceedings.pdf
The fact is, people have convinced themselves that this is somehow a good idea. And then half the time, the person behind it doesn't actually burn any money and just arbitrarily mints coins. It's absolute lunacy.
- alexb_ 4y agocryptocurrency people telling me that burning money in exchange for a token is a good idea actually is the last thing I expected when I posted this yet, somehow, I am not in any way, shape, or form surprised
- hbbio 4y agoMind that... it actually was a good idea. Until people started cheating with it, exactly as you say. Tokenized dollars allow to benefit from the tech (smart contracts), which is itself great and opens a lot of possibilities. What's not is: Ponzi schemes (Terra), crooks (Tether?). Edit: There are valid stablecoins like USDC (they hold sufficient reserves) and even valid algorithmic stablecoins e.g. LUSD, backed by Ethers and with a legit protocol for ensuring over-collateralization that is also immutable.
- ptero 4y ago> There are valid stablecoins like USDC (they hold sufficient reserves) Those reserves are sufficient until they are not. There are always risks of losing the peg and anyone investing in them should be aware of and track the main ones. My 2c.
- emteycz 4y agoHow is it any different from a bank? (I live in a country with well done digital currency regulation that is comparable to what banks have to do - let's not limit this to the case of Tether only).
- ptero 4y agoWhich country and which stablecoin do you have in mind, if I may ask; just curious. A big difference with banks is that in most countries with well regulated banking the government will step in to bail out the account holder in a registered bank if that bank goes under. While most government officials will sing and dance if a stablecoin (which complicates their monetary decisions and, if big enough, can even arbitrage those away) fails. Government support is not the only thing that matters, but it is an important thing to consider when comparing a stablecoin vs fiat.
- emteycz 4y agoNo stable coin yet, the legislation is completely new so nobody has caught on yet - but it'd be weird if nobody did. The country is Czech Republic. I really don't think anybody here would dance or sing. The politicians here are positive about Bitcoin, as well as the central bankers.
- ineedasername 4y ago>different from a bank Depends on the country. In the US, FDIC insurance requirements mean that depositors will be reimbursed up to $250,000 if a bank collapses, so there's very little risk. If you need more than $250,000 in cash then you should probably have multiple accounts at different banks or park the money in some other highly liquid low-risk assets that are, as much as possible, uncorrelated.
- hbbio 4y agoUnless the auditors (Grant Thornton, a reputable large company) are lying, they have 1:1 https://www.centre.io/hubfs/PDF/2022%20Circle%20Examination%20Report%20March%202022.pdf?hsLang=en https://www.centre.io/hubfs/PDF/2022%20Circle%20Examination%...
- whimsicalism 4y agoDai? Not a ponzi scheme. USDC is the same thing as Tether. It's too bad Terra ever existed. I took one look over their plan to keep their coin stable and noped out of there.
- ttul 4y agoTether is unaudited. USDC has at least been audited by a global tier-1 accounting firm. That’s a huge difference.
- whimsicalism 4y agoBoth Tether and USDC are unaudited. Both USDC and Tether are attested by outside accounting firms, although the USDC firm is more reputable.
- alexb_ 4y agoAnd as we all know from 2008, large accounting firms would never lie about the quality of other companies for their own benefit.
- whimsicalism 4y agoyou are conflating CRAs and accounting firms.
- can16358p 4y agoThe idea is actually good, and a great gateway between crypto world and fiat world. The actors (looking at you, Tether), might not necessarily be.
- aidos 4y agoWho would burn money, that would be madness... https://en.wikipedia.org/wiki/K_Foundation_Burn_a_Million_Quid https://en.wikipedia.org/wiki/K_Foundation_Burn_a_Million_Qu... https://www.youtube.com/watch?v=L9SzDFGbsFI&t=390s https://www.youtube.com/watch?v=L9SzDFGbsFI&t=390s
- jmyeet 4y agoHere's a question for tether "investors": why are you investing in something whose stated goal is to maintain a peg to the USD instead of, you know, just holding money in US dollars? You're adding a bunch of risk for literally no upside. The only thing you gain is to to trade that on the blockchain, which is really a response to the oracle problem. So you've greatly increased your risk with no upside to slightly increase your utility. That doesn't seem like a good deal.
- dmichulke 4y agoAs a US citizen try to send dollars to a Hong Kong or Singapore registered exchange. I think the "investing" in tether is really only the best match to "Let me see, where can I park my money in the least volatile way on this crypto exchange". EDIT: Interestingly, if tether breaks, then USDC is the last man standing and will have to work hard to maintain the peg. Under such circumstances it's quite possible that BTC is the next best "stable" coin.
- ineedasername 4y agoIf USDC is truly backed 100% as stated then it shouldn't be a problem. In fact it might help them gain market share if coins with less backing de-pegged. Though I guess it could also lead to a general loss of faith in stable coins and folks as a whole would shy away from them. Either way, most stable coins are built on some form of trust, and I'm much more inclined to trust Coinbase than most others. (Disclaimer: I have no dog in this hunt, I don't own any crypto whatsoever.)
- whimsicalism 4y agoDai? Why does everyone always forget Dai? Unlike Tether and USDC, I can actually verify that Dai is overcollateralized.
- fooyc 4y agoMy understanding is that people don't invest in stable coins (like you don't invest in USD when you have USD on your brokerage account). Stable coins can be exchanged against other crypto currencies on chain. So if you are willing to trade crypto currencies, stable coins are more practical than USD. There are also tax implications: Depending on where you live, crypto-to-crypto profits are not taxable. You will be taxed if you sell crypto currencies for USD, but not if you sell crypto currencies for a stable coin.
- reedlaw 4y agoBurning US $1 notes could not provide backing for minted coins. A better analogy is currency backed with gold without enough in reserve to handle a run on the bank.
- SamBam 4y agoHow does burning over 100 MWh of electricity provide backing for a minted coin, yet directly burning currency doesn't? What's the difference, besides the pollution?
- mcintyre1994 4y agoIt could provide some level of scarcity, so if there was demand you could achieve some sort of value. It wouldn't be stable though - you couldn't make a stablecoin on proof of work either AFAIK. I guess it'd have an upper bound at $1 (why buy it for $2 if you can just burn $1), but no lower bound. So.. maybe it is a stablecoin :)
- fooyc 4y agoI feel that the joke may be about the implementation, maybe not the whole concept.
- mcintyre1994 4y agoThe difference between Tether and DollarCoin is that you can (if nobody is lying) exchange a tether for a USD. If each USD that bought a tether was burned as in DollarCoin, then it wouldn't have that property. You're not supposed to "burn any money" when you mint tether, you're supposed to put aside $1 that can be exchanged for that tether at a later date. I think what you're missing is that backed stablecoins don't involve burning any money at all, so whether or not that'd be a good idea is irrelevant.
- cuteboy19 4y agoOnly institutions can exchange their tether for $$. They scrubbed the 1:1 claim from their website long ago
- bootlooped 4y agoDid that ever come out of the pool of money that went into minting the tether? Or was it just more consumers getting in while others got out?
- ttul 4y agoConsidering that no serious and credible audit has ever before verified the backing of USDT, I think we all can agree it is a Ponzi scheme, through and through.
- yreg 4y agoTether itself is shady and I have my doubts about them, but the concept is simple. You mint some coins and sell them for $1 each. Then watch the exchanges and any time the price is above $1 you mint some coins and sell them. Any time the price is below $1 you buy some coins and burn them. Doing this and only this you should always have more dollars in hand than the amount of coins in circulation.
- 0xffff2 4y ago>any time the price is above $1 you mint some coins and sell them What if you run out of dollars and the price is still above $1?
- SkeuomorphicBee 4y agoDollarCoin is the best summary of proof-of-work that I've ever seen. Just replace "burning US $1 notes" with "burning [x] Watts-hour of electricity" and it describes Bitcoin to a T.
- kurisufag 4y agothat isn't actually at all the function or purpose of PoW though. in the example, the burning of "real" dollars represents the validity of a single "DollarCoin" existing. the "burning" of electricity for bitcoin is the result of finding a schema that promotes verification of the network by awarding coins by consensus. PoW is a /validation/ pattern, and while burning dollars on video and linking the hashes together can comprise a blockchain, there is no actual decentralized validation going on. it's alright as a snarky line, but outright saying "the best summary of proof-of-work that I've ever seen" is misleading to people that didn't actually know, and now have a completely incorrect idea of what it is.
- blintz 4y agoThis is maybe a bit of a tangent, but the fact that transaction validation happens as part of Bitcoin’s proof-of-work process is incidental. It’s perfectly fine to mine an empty block, and the only incentive to include transactions is transaction fees. You earn rewards even if you conduct no transaction validation. The analogous option for DollarCoin would be letting you put a placard in the video with some (valid) transactions on it and recoup a fee from each. The point is that, it’s not such a bad analogy of just “proof-of-work”, which is a meaningfully separate concept than decentralized transaction validation. Though I agree, I mean a regular person might definitely be more confused than helped by the ‘dollars on fire’ analogy.
- bbno4 4y agoActually Tether was released in 2014, and there's earlier stablecoins.
- aeternum 4y agoIt's useful mostly because the traditional system hasn't adapted. It is ridiculous that our large banks still basically use FTP transfers of text files to move money, and those transfers typically take 48+ hours to settle. Waiting 2 days isn't good enough for many applications, that's a lot of risk to take on.