4 ms·

> I get my dollar back or not. This is the core issue. Note that you can't go to Tether and demand your $1 back as an individual. You would have to use an exc

> I get my dollar back or not. This is the core issue. Note that you can't go to Tether and demand your $1 back as an individual. You would have to use an exchange and hope that you can trade 1 Tether for 1 dollar on an exchange where you can cash out. Note that the company that owns Tether also owns and exchange, which further opens the door for a lot of fraud and shenanigans as they co-mingle exchange deposits with their Tether reserves. It's possible for exchanges to run for a long time without actually having 100% of funds in reserve as long as the customers don't all withdraw their funds at the same time. In other words: A hypothetical fraudulent stable coin could "work" for a long time, until it suddenly doesn't work at all and the value plummets.

anonporridge 4y ago
> In other words: A hypothetical fraudulent stable coin could "work" for a long time, until it suddenly doesn't work at all and the value plummets. Sounds exactly like what happened to the dollar itself, which once upon a time used to be a "stablecoin" pegged to gold. It was pegged soundly to $35 per ounce of gold for decades. It was even ok with the one time 'repegging' from $20 to $35 in 1932 to deal with the Great Depression. But then when we finally broke the gold peg in 1971 and then all the pent up cheating broke free and the price crashed to ~$160 per ounce in only 3 years, and then all the way to $630 after 10 years. https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart https://www.macrotrends.net/1333/historical-gold-prices-100-...
- Nursie 4y ago
  That's still several orders of magnitude slower than the overnight cratering we see from stablecoins.
  - anonporridge 4y ago
    Things move several orders of magnitude slower in the analog world. The digital world moves fast.
- jerf 4y ago
  Pegging one currency to another is fundamentally impossible in the long term. If you don't believe me, keep your eye on the foreign exchanges for the next, oh, year or so. Hopefully that's a generous enough time frame, since trying to guess how long the paper mache coverings can be slapped up and held together is always very hard, but there's a lot of "pegged" currencies in the world that are not going to be pegged for much longer because they simply won't be able to be.

anonporridge 4y ago

> In other words: A hypothetical fraudulent stable coin could "work" for a long time, until it suddenly doesn't work at all and the value plummets. Sounds exactly like what happened to the dollar itself, which once upon a time used to be a "stablecoin" pegged to gold. It was pegged soundly to $35 per ounce of gold for decades. It was even ok with the one time 'repegging' from $20 to $35 in 1932 to deal with the Great Depression. But then when we finally broke the gold peg in 1971 and then all the pent up cheating broke free and the price crashed to ~$160 per ounce in only 3 years, and then all the way to $630 after 10 years. https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart https://www.macrotrends.net/1333/historical-gold-prices-100-...

Nursie 4y ago
That's still several orders of magnitude slower than the overnight cratering we see from stablecoins.
- anonporridge 4y ago
  Things move several orders of magnitude slower in the analog world. The digital world moves fast.
jerf 4y ago
Pegging one currency to another is fundamentally impossible in the long term. If you don't believe me, keep your eye on the foreign exchanges for the next, oh, year or so. Hopefully that's a generous enough time frame, since trying to guess how long the paper mache coverings can be slapped up and held together is always very hard, but there's a lot of "pegged" currencies in the world that are not going to be pegged for much longer because they simply won't be able to be.