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> In the non-crypto real world, nothing lasts forever. Gold does. > You can have a stablecoin pegged to a basket of assets, a consumer price index, or some ar

by Proven 4y ago

> In the non-crypto real world, nothing lasts forever. Gold does. > You can have a stablecoin pegged to a basket of assets, a consumer price index, or some arbitrarily complex formula ("a quantity of value sufficient to buy {global average CO2 concentration minus 375} hectares of land in the forests of Yakutia"). As long as you can find an oracle to prove the index, and people to participate on all sides of the market, you can make such a stablecoin work. Why would I want any of that? I can buy real assets rather than assume that these oracles, "Smart" Contracts, code dependencies, blockchain (network), and developers will remain stable in extreme conditions. If you need stablecoin, that's because cryptocurrencies are useless to denominate prices. We may as well use a Central Bankster-backed coin (which no one invested in crypto wants to admit). It may be harder to remain anonymous, but at least there's much less to fail (mostly just the currency itself, which is why buying real-world assets represented by tokens is a much better approach). (The charts and formulas made me laugh - seriously? Who wants to take Cryptocurrencies 101, read some "white paper" and do "research" before they decide to park savings in a "stable" coin??? Give up, it's ridiculous!)

colechristensen 4y ago
Central banks and large institutional banks are researching blockchain solutions for many of the things they do, not for the rebellious crypto reasons but because a distributed ledger with crypto guarantees can actually be a lot simpler to manage than a bunch of mainframe business logic developed decades past. This would be less for consumers paying for things but the many methods banks use to settle accounts between themselves. Example: https://www.bloomberg.com/news/articles/2022-05-26/jpmorgan-finds-new-use-for-blockchain-in-collateral-settlement https://www.bloomberg.com/news/articles/2022-05-26/jpmorgan-...
- sofixa 4y ago
  Nope, that's entirely for PR reasons. For some reason "blockchain" is still hype. Does it even matter there's a blockchain if it's centralised at a single party? Central banks are looking in digital currencies (the so called CBDC), but blockchain is completely useless for that.
  - okwubodu 4y ago
    It makes the most sense when you're managing liquidity between multiple parties. I bet it would still be a logical next step if they couldn't get a PR boost off the hype.
    - bombcar 4y ago
      If you have a group that has a trusted party (even if said party is one of the group, or a new group made from the group itself), that party can just run a bog-standard database and there's no need for a blockchain.
      - okwubodu 4y ago
        Of course, it’s an architecture decision. They do different things and different considerations may lead you to one or the other.
- cuteboy19 4y ago
  Please understand that these types of decisions come straight from management so that they can tick off a box somewhere with the word blockchain. You may have heard this bank invest in IoT and AI/ML solutions as well. It's just buzzwords. There is no technical reason why this needs to be on a blockchain and it is very likely that the ""blockchain"" is run on some mainframe or 'private cloud' because that is how banks do tech.
zmgsabst 4y ago
I think the value in cryptocurrency has always been tokens which represent real goods intermixed with a digital, distributed transaction network. Smart contracts are a nice bonus. Unfortunately, early conmen seized the helm of Bitcoin, removed the smart contract opcodes, and led us down the “digital (fools) gold” path.
medo-bear 4y ago
people constantly see blockchain as a currency replacement. while this is a consequence it is not its raison d'etre. instead it is a decentralized, bank-less, accounting mechanism with its own denomination. it is up to you if you see value in this or not. i personally see value in being able to move my assets with involvement of a minimal (preferably but not necessarily 0) number of third parties
- pfisherman 4y ago
  My understanding is that a blockchain is a distributed, publicly inspectable, append-only database is IRB some special properties. Is that not accurate?
- cuteboy19 4y ago
  there is no incentive to run it without the currency part. you water it down further and it just becomes git
  - medo-bear 4y ago
    yes or any vc, or an incoming/outgoings journal, or a bank account ... except ... trustless and decentralized
    - cuteboy19 4y ago
      I mean git is also trustless and decentralised
      - medo-bear 4y ago
        git is trustless to the extent of vc purposes. it is not trustless to the level of financial accounting. for example git has no concept of double spending, while in a blockchain there is (usually?) no concept of branching and merging. but you are right in that they are both based on merkle trees
        4y ago
fleddr 4y ago
That's just a misunderstanding of why (most) people use stablecoins in the first place. It's not ideological, it's practical. When you sell crypto and want to exchange it for "real" money, say USD, some exchanges don't support that, they only support crypto to crypto conversions. On exchanges that do support it, it's sometimes slow and often comes with a fee. Both the exchange and your bank may impose arbitrary limits on it. It may create a taxable event. By comparison, a crypto to crypto conversion (say BTC to USDC) is instant, often free, and without much limitation. If actual USD had none of the above limitations, nobody would need or use a stablecoin. It's a utility, not some bet against the dollar.
- overtonwhy 4y ago
  The exchanges that don't support cashing out direct to your USD bank are unlicensed and unregulated and they're dealing in Tether to skirt the KYC and AML requirements that a real financial business has to have. Those exchanges deal in scam coins that are pure pump and dump. Those exchanges don't have to keep client funds in reserve.
  - elefanten 4y ago
    This is not the point. Even the most legal/regulated have to ACH/wire cash. If you’re a trader and want to raise your cash portion of a portfolio it’s much faster/easier/cheaper to hold stablecoins. The cost is that it’s riskier.
    - jazzyjackson 4y ago
      I don't know what you mean, for instance because Gemini follows all the regulations, I can hold USD cash in my account and it's even FDIC insured. Wiring back to a checking account is an option, but I can keep liquidity at the ready without dealing in stablecoins.
  - aqme28 4y ago
    You're ignoring distributed exchanges like Uniswap. They only deal in crypto-crypto because they exist only on the blockchain.
lekevicius 4y ago
For cryptocurrencies with fees priced with gas, price volatility is not a problem. As the price grows, number of gas units per operation will likely go down, but will maintain its "stable currency" price. Ether's price doesn't have to stay fixed. It can grow or fall, increasing or decreasing economic security of the network (assuming Proof of Stake). There is no good way to ensure price stability, and there's no reason to. We don't complain that stock prices change. That's why smart contract cryptocurrencies have stablecoins: to address "stable use case". But this is just one of many possible "dapps", many don't need external peg to function (NFTs can be priced in the volatile ETH just fine).
BenoitEssiambre 4y ago
Note that gold can have long run negative returns if you count, storage costs, transportation costs, insurance costs etc. plus it's not very stable in the short run.
CryptoPunk 4y ago

by Proven 4y ago

colechristensen 4y ago

Central banks and large institutional banks are researching blockchain solutions for many of the things they do, not for the rebellious crypto reasons but because a distributed ledger with crypto guarantees can actually be a lot simpler to manage than a bunch of mainframe business logic developed decades past. This would be less for consumers paying for things but the many methods banks use to settle accounts between themselves. Example: https://www.bloomberg.com/news/articles/2022-05-26/jpmorgan-finds-new-use-for-blockchain-in-collateral-settlement https://www.bloomberg.com/news/articles/2022-05-26/jpmorgan-...

sofixa 4y ago
Nope, that's entirely for PR reasons. For some reason "blockchain" is still hype. Does it even matter there's a blockchain if it's centralised at a single party? Central banks are looking in digital currencies (the so called CBDC), but blockchain is completely useless for that.
- okwubodu 4y ago
  It makes the most sense when you're managing liquidity between multiple parties. I bet it would still be a logical next step if they couldn't get a PR boost off the hype.
  - bombcar 4y ago
    If you have a group that has a trusted party (even if said party is one of the group, or a new group made from the group itself), that party can just run a bog-standard database and there's no need for a blockchain.
    - okwubodu 4y ago
      Of course, it’s an architecture decision. They do different things and different considerations may lead you to one or the other.
cuteboy19 4y ago
Please understand that these types of decisions come straight from management so that they can tick off a box somewhere with the word blockchain. You may have heard this bank invest in IoT and AI/ML solutions as well. It's just buzzwords. There is no technical reason why this needs to be on a blockchain and it is very likely that the ""blockchain"" is run on some mainframe or 'private cloud' because that is how banks do tech.

zmgsabst 4y ago

I think the value in cryptocurrency has always been tokens which represent real goods intermixed with a digital, distributed transaction network. Smart contracts are a nice bonus. Unfortunately, early conmen seized the helm of Bitcoin, removed the smart contract opcodes, and led us down the “digital (fools) gold” path.

medo-bear 4y ago

people constantly see blockchain as a currency replacement. while this is a consequence it is not its raison d'etre. instead it is a decentralized, bank-less, accounting mechanism with its own denomination. it is up to you if you see value in this or not. i personally see value in being able to move my assets with involvement of a minimal (preferably but not necessarily 0) number of third parties

pfisherman 4y ago
My understanding is that a blockchain is a distributed, publicly inspectable, append-only database is IRB some special properties. Is that not accurate?
cuteboy19 4y ago
there is no incentive to run it without the currency part. you water it down further and it just becomes git
- medo-bear 4y ago
  yes or any vc, or an incoming/outgoings journal, or a bank account ... except ... trustless and decentralized
  - cuteboy19 4y ago
    I mean git is also trustless and decentralised
    - medo-bear 4y ago
      git is trustless to the extent of vc purposes. it is not trustless to the level of financial accounting. for example git has no concept of double spending, while in a blockchain there is (usually?) no concept of branching and merging. but you are right in that they are both based on merkle trees
      - 4y ago

fleddr 4y ago

That's just a misunderstanding of why (most) people use stablecoins in the first place. It's not ideological, it's practical. When you sell crypto and want to exchange it for "real" money, say USD, some exchanges don't support that, they only support crypto to crypto conversions. On exchanges that do support it, it's sometimes slow and often comes with a fee. Both the exchange and your bank may impose arbitrary limits on it. It may create a taxable event. By comparison, a crypto to crypto conversion (say BTC to USDC) is instant, often free, and without much limitation. If actual USD had none of the above limitations, nobody would need or use a stablecoin. It's a utility, not some bet against the dollar.

overtonwhy 4y ago
The exchanges that don't support cashing out direct to your USD bank are unlicensed and unregulated and they're dealing in Tether to skirt the KYC and AML requirements that a real financial business has to have. Those exchanges deal in scam coins that are pure pump and dump. Those exchanges don't have to keep client funds in reserve.
- elefanten 4y ago
  This is not the point. Even the most legal/regulated have to ACH/wire cash. If you’re a trader and want to raise your cash portion of a portfolio it’s much faster/easier/cheaper to hold stablecoins. The cost is that it’s riskier.
  - jazzyjackson 4y ago
    I don't know what you mean, for instance because Gemini follows all the regulations, I can hold USD cash in my account and it's even FDIC insured. Wiring back to a checking account is an option, but I can keep liquidity at the ready without dealing in stablecoins.
- aqme28 4y ago
  You're ignoring distributed exchanges like Uniswap. They only deal in crypto-crypto because they exist only on the blockchain.

lekevicius 4y ago

For cryptocurrencies with fees priced with gas, price volatility is not a problem. As the price grows, number of gas units per operation will likely go down, but will maintain its "stable currency" price. Ether's price doesn't have to stay fixed. It can grow or fall, increasing or decreasing economic security of the network (assuming Proof of Stake). There is no good way to ensure price stability, and there's no reason to. We don't complain that stock prices change. That's why smart contract cryptocurrencies have stablecoins: to address "stable use case". But this is just one of many possible "dapps", many don't need external peg to function (NFTs can be priced in the volatile ETH just fine).

BenoitEssiambre 4y ago

Note that gold can have long run negative returns if you count, storage costs, transportation costs, insurance costs etc. plus it's not very stable in the short run.

CryptoPunk 4y ago