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If a stablecoin is fully backed by USD, why does it exist? The only reasons for these coins to exist are: 1. Avoid proper financial controls and regulations i

If a stablecoin is fully backed by USD, why does it exist? The only reasons for these coins to exist are: 1. Avoid proper financial controls and regulations imposed on real currencies and operate illegally. 2. To separate fools from their USD and replace it with USDT or whatever.

zeven7 4y ago
Those are not the only possible reasons for stable coins to exist. The obvious other reason is to use them on the blockchain. You cannot use USD on the blockchain. Maybe you don't think there's anything of value on the blockchain and that's why you don't see a use for it. I don't want to get into an argument over whether blockchain tech has a use case or a future in this comment chain, but for the sake of understanding what stable coins could be used for just grant the following: - There is some use for ETH out there that doesn't involve avoiding financial controls and regulations or separating fools from their USD If you will grant that, then it's easy to see why here would be a use for USDC or similar. ETH price fluctuates. If you need to be able to utilize Ethereum, it's helpful to have value on it. If you don't want that value to fluctuate, you can hold it in USDC and convert to ETH when you want to use it. Plain and simple, this is the first application for stable coins. If you will not grant that there is a use case for ETH then there's no point in having a discussion about stable coins anyway. That's a separate discussion that needs to be had first.
- Hasu 4y ago
  > There is some use for ETH out there that doesn't involve avoiding financial controls and regulations or separating fools from their USD I do not grant this, because Ethereum has been around for 7 years and no such uses have materialized yet.
  - zeven7 4y ago
    Ok, then there's no point in having the stable coin conversation.
zeven7 4y ago
This is akin to asking why commodity futures exist. It's an abstraction that provides utility. In the case of commodity futures, it allows commodities to be traded on an exchange where bags of onion seeds would otherwise be difficult to trade. In the case of USDC it allows USD to exist on the blockchain so that it can interact with smart contracts. Believe it or not, if you want to invest in gold, the only option isn't buying and storing physical gold in your home. That might even be a dangerous idea. Stocks are certificates which claim partial ownership of a company. But how can owning a piece of paper be like owning a part of a company? What is a company anyway but an abstraction over the concept of group liabilities, assets, contracts, and actions? Or do you think companies only exist to allow people to break laws under another identity?
- grey-area 4y ago
  The question is, what utility? Thanks for the usual collection of talking points from 2017 that nobody uses in the real world. There is no utility to these blockchain tokens except to scam others.
  - philippejara 4y ago
    he already specified it in is his comment: > In the case of USDC it allows USD to exist on the blockchain so that it can interact with smart contracts. if you wanna question whether smart contracts are useful or not feel free, I sure do, but drop the smarminess when the answer to your question lies within the first paragraph.
    - grey-area 4y ago
      Yes, strangely enough, that is exactly what I’m questioning! They are a terrible idea whose time came and went around 2017.
      - kyleee 4y ago
        You are not really questioning, as that would imply you are interested in and/or listening to answers. It’s more accurate to say that you are “proclaiming”, which is perfectly fine, but doesn’t make for great conversation
PKop 4y ago
It's obvious why it exists. Dollar liquidity inside of the crypto network ecosystem. You can quickly move out of volatile assets into stable coins. You can transfer these stable coins quickly into and out of wallets and contracts. You cannot do either of these as efficiently with pure fiat which would then require an "IOU" from an exchange which would be less transferable, require trust of the exchange, and would insert friction moving into or out of the $.
pclmulqdq 4y ago
If you want to use dollars in a smart contract or otherwise in the crypto "ecosystem" (holding them in a wallet), they are useful. If I were Goldman Sachs, I would have made the "GS Cryptodollar" by now, but we're stuck with weird and untrustworthy stablecoins like Tether and USDC. By the way, the concept of a "stablecoin" (defined as a currency located in a separate financial system than its home) isn't new - you can buy eurodollar futures which are futures on dollars that are physically located in Europe. Ironically, you can also buy euroeuro futures contracts which are for euros located in the US: the euro- prefix on a currency just means "not delivered inside sovereign borders, although the European eurodollar is by far the most important of these.

zeven7 4y ago

Those are not the only possible reasons for stable coins to exist. The obvious other reason is to use them on the blockchain. You cannot use USD on the blockchain. Maybe you don't think there's anything of value on the blockchain and that's why you don't see a use for it. I don't want to get into an argument over whether blockchain tech has a use case or a future in this comment chain, but for the sake of understanding what stable coins could be used for just grant the following: - There is some use for ETH out there that doesn't involve avoiding financial controls and regulations or separating fools from their USD If you will grant that, then it's easy to see why here would be a use for USDC or similar. ETH price fluctuates. If you need to be able to utilize Ethereum, it's helpful to have value on it. If you don't want that value to fluctuate, you can hold it in USDC and convert to ETH when you want to use it. Plain and simple, this is the first application for stable coins. If you will not grant that there is a use case for ETH then there's no point in having a discussion about stable coins anyway. That's a separate discussion that needs to be had first.

Hasu 4y ago
> There is some use for ETH out there that doesn't involve avoiding financial controls and regulations or separating fools from their USD I do not grant this, because Ethereum has been around for 7 years and no such uses have materialized yet.
- zeven7 4y ago
  Ok, then there's no point in having the stable coin conversation.

zeven7 4y ago

This is akin to asking why commodity futures exist. It's an abstraction that provides utility. In the case of commodity futures, it allows commodities to be traded on an exchange where bags of onion seeds would otherwise be difficult to trade. In the case of USDC it allows USD to exist on the blockchain so that it can interact with smart contracts. Believe it or not, if you want to invest in gold, the only option isn't buying and storing physical gold in your home. That might even be a dangerous idea. Stocks are certificates which claim partial ownership of a company. But how can owning a piece of paper be like owning a part of a company? What is a company anyway but an abstraction over the concept of group liabilities, assets, contracts, and actions? Or do you think companies only exist to allow people to break laws under another identity?

grey-area 4y ago
The question is, what utility? Thanks for the usual collection of talking points from 2017 that nobody uses in the real world. There is no utility to these blockchain tokens except to scam others.
- philippejara 4y ago
  he already specified it in is his comment: > In the case of USDC it allows USD to exist on the blockchain so that it can interact with smart contracts. if you wanna question whether smart contracts are useful or not feel free, I sure do, but drop the smarminess when the answer to your question lies within the first paragraph.
  - grey-area 4y ago
    Yes, strangely enough, that is exactly what I’m questioning! They are a terrible idea whose time came and went around 2017.
    - kyleee 4y ago
      You are not really questioning, as that would imply you are interested in and/or listening to answers. It’s more accurate to say that you are “proclaiming”, which is perfectly fine, but doesn’t make for great conversation

PKop 4y ago

It's obvious why it exists. Dollar liquidity inside of the crypto network ecosystem. You can quickly move out of volatile assets into stable coins. You can transfer these stable coins quickly into and out of wallets and contracts. You cannot do either of these as efficiently with pure fiat which would then require an "IOU" from an exchange which would be less transferable, require trust of the exchange, and would insert friction moving into or out of the $.

pclmulqdq 4y ago

If you want to use dollars in a smart contract or otherwise in the crypto "ecosystem" (holding them in a wallet), they are useful. If I were Goldman Sachs, I would have made the "GS Cryptodollar" by now, but we're stuck with weird and untrustworthy stablecoins like Tether and USDC. By the way, the concept of a "stablecoin" (defined as a currency located in a separate financial system than its home) isn't new - you can buy eurodollar futures which are futures on dollars that are physically located in Europe. Ironically, you can also buy euroeuro futures contracts which are for euros located in the US: the euro- prefix on a currency just means "not delivered inside sovereign borders, although the European eurodollar is by far the most important of these.