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Or maybe you just don't understand it? The whole point of USDC is to have exposure to USD and the US banking system, which is supposed to be stable compared to

Or maybe you just don't understand it? The whole point of USDC is to have exposure to USD and the US banking system, which is supposed to be stable compared to other banking systems around the world. Could that maybe be why it's called USDC? Hmm. If the US banking system starts failing, it absolutely should affect USD stable coins backed by exactly this banking system.

mtlmtlmtlmtl 4y ago
In what universe is the US banking system more stable than other places in the world? Compared to 3rd world countries?
- _5uxp 4y ago
  I'd say not majority of the banks or anything like that but top ones like Goldman Sachs (Apple's choice) is more stable than all 3rd world countries and their CB too. Because GS has money printer on their side, literally.
  - mtlmtlmtlmtl 4y ago
    On the other hand, you could throw a dart at a random non-US WEIRD country and find a more stable banking system..
- beebmam 4y ago
  Well, I'm pretty sure all credible banks in the US are all insured (both explicitly with FDIC and implicitly far beyond that) by the US government. That's a pretty big thing
  - mtlmtlmtlmtl 4y ago
    That doesn't make them stable. The 2008 financial crisis was literally caused by big US banks. They then had to be bailed out. This is not a symptom of a stable banking system. It's a symptom of the banks having a disturbing amount of power over the government, which is not a good thing. They were able to conduct what is essentially fraud at a massive scale with impunity because they knew the gov would bail them out when shit hit the fan. I really don't understand what's so "stable" about this.
    - fladrif 4y ago
      Well whether or not you think banking / government cooperation is a good thing, the fact of the matter is that even when large catastrophes occur, the system is brought back up on its feet. You can't say the same for crypto systems, luna / terra being a very recent example.
      - mtlmtlmtlmtl 4y ago
        Hey, nice straw man. Of course I think banks should cooperate with the government. I just don't think banks should be more powerful than the gov, which in the US, arguably they are in certain contexts. And I never said crypto anything was stable on any level. I genuinely believe crypto has 0 usefulness for anything other than very specialised cases, usually to do with avoiding regulation. The point I was making was that the banking system literally caused the large catastrophe. The fact that people seem to twist this into suggesting it's stable is just absurd. Just like if your entire SAAS product horribly crashed, deleted and/or leaked a bunch of important customer data and so on, the fact that you were able to fix it doesn't magically mean the system was stable before.
        iudqnolq 4y ago
        What you're missing is the bailout is part of the system, and counts towards its stability. In your analogy imagine your SAAS product horribly crashed and deleted customer data. So your cloud provider restored from the backups you had arranged and you were running normally soon after. Not ideal, but you had a far more stable system than someone without backups.
        Karunamon 4y ago
        That only matters if you think that capability to be "bailed out" is legitimate in the first place. There is a pretty good argument to be made that allowing institutions to be "too big to fail" is directly enabling a lot of bad behavior, behavior that wouldn't happen if there was an understanding your bank can fail and you will not be compensated as a shareholder, only as a depositor under FDIC
re-thc 4y ago
Can't you just buy USD directly? How does that help? What does the C part of it do?
- deleted 4y ago
  [deleted]
- eternauta3k 4y ago
  Hard if you're in a country with currency exchange restrictions like Argentina (a big adopter).
- searchableguy 4y ago
  USDC is an ERC20 token on the blockchain. This is required to work with smart contracts and dapps. You can swap USDC for any on-chain asset using uniswap or mix them up using a mixer like tornado cash. It also escapes any capital controls to hold USD which is a benefit for those who are outside US and live in poor or draconian countries.
- loveparade 4y ago
  No, in many countries you cannot buy USD directly. You also cannot store USD in a local bank account. And in various places it's explicitly forbidden to hold USD as savings because it would devalue local currency if everyone started transacting in USD instead. So, the "C" makes USD exposure available to anyone worldwide, assuming you have e.g. an Ethereum wallet.
  - pHollda 4y ago
    If anyone doubts that this is just a theory, I can confirm it. I live in third-world countries and use USDC exactly for this.
    - FabHK 4y ago
      I have lived and travelled extensively in second and third world countries, and almost never had a problem buying or selling USD. Well, in some places there were indeed capital controls (Argentina, China), but that's rare, and I doubt use of USDC is legal then for the circumvention of regulation (which is basically the only use case of crypto).
FabHK 4y ago
That's funny. The USD is entirely unaffected. Some deposits at certain banks are affected for large (mostly professional) holders. Retail investors will be made whole (up to 250k), thanks to this banking regulation thingy you might have heard of. USDC is meant to mirror the USD (sure, with its concomitant FX and inflation risk), but it is certainly not meant to introduce credit risk vis-à-vis some bank most people hadn't heard of last week.
- hailwren 4y ago
  You’re aware that ~$150B of $200B SVB deposits are not covered by FDIC insurance, correct? I don’t think SVB is going to end up 0, but pointing at 25% of investments being safe and saying “look regulation works so well” seems absurd.
  - lukeschlather 4y ago
    All the people involved are institutional investors. 0% of people who have USD savings under $250k are affected by this. On the other hand, anybody who has a significant portion of their net worth tied up in cryptocurrency is affected by this.
    - 101011 4y ago
      Minor correction, people employed by companies that banked with SVB are also heavily affected here.
      - FabHK 4y ago
        Indeed, if your company is in the banking business without understanding the banking business, you might have a surprise coming up. As in most other industries.
    - radlad 4y ago
      ... and all the people and companies those companies banking with SVB have to pay?
lxgr 4y ago
It‘s a bit like expecting physical USD bills to spontaneously combust due to whatever market forces. The value of one USD stablecoin (measured e.g. in various commodities) might well go down, but the redeemability for one USD never should, regardless of the economic environment.

mtlmtlmtlmtl 4y ago

In what universe is the US banking system more stable than other places in the world? Compared to 3rd world countries?

_5uxp 4y ago
I'd say not majority of the banks or anything like that but top ones like Goldman Sachs (Apple's choice) is more stable than all 3rd world countries and their CB too. Because GS has money printer on their side, literally.
- mtlmtlmtlmtl 4y ago
  On the other hand, you could throw a dart at a random non-US WEIRD country and find a more stable banking system..
beebmam 4y ago
Well, I'm pretty sure all credible banks in the US are all insured (both explicitly with FDIC and implicitly far beyond that) by the US government. That's a pretty big thing
- mtlmtlmtlmtl 4y ago
  That doesn't make them stable. The 2008 financial crisis was literally caused by big US banks. They then had to be bailed out. This is not a symptom of a stable banking system. It's a symptom of the banks having a disturbing amount of power over the government, which is not a good thing. They were able to conduct what is essentially fraud at a massive scale with impunity because they knew the gov would bail them out when shit hit the fan. I really don't understand what's so "stable" about this.
  - fladrif 4y ago
    Well whether or not you think banking / government cooperation is a good thing, the fact of the matter is that even when large catastrophes occur, the system is brought back up on its feet. You can't say the same for crypto systems, luna / terra being a very recent example.
    - mtlmtlmtlmtl 4y ago
      Hey, nice straw man. Of course I think banks should cooperate with the government. I just don't think banks should be more powerful than the gov, which in the US, arguably they are in certain contexts. And I never said crypto anything was stable on any level. I genuinely believe crypto has 0 usefulness for anything other than very specialised cases, usually to do with avoiding regulation. The point I was making was that the banking system literally caused the large catastrophe. The fact that people seem to twist this into suggesting it's stable is just absurd. Just like if your entire SAAS product horribly crashed, deleted and/or leaked a bunch of important customer data and so on, the fact that you were able to fix it doesn't magically mean the system was stable before.
      - iudqnolq 4y ago
        What you're missing is the bailout is part of the system, and counts towards its stability. In your analogy imagine your SAAS product horribly crashed and deleted customer data. So your cloud provider restored from the backups you had arranged and you were running normally soon after. Not ideal, but you had a far more stable system than someone without backups.
        Karunamon 4y ago
        That only matters if you think that capability to be "bailed out" is legitimate in the first place. There is a pretty good argument to be made that allowing institutions to be "too big to fail" is directly enabling a lot of bad behavior, behavior that wouldn't happen if there was an understanding your bank can fail and you will not be compensated as a shareholder, only as a depositor under FDIC

re-thc 4y ago

Can't you just buy USD directly? How does that help? What does the C part of it do?

deleted 4y ago
[deleted]
eternauta3k 4y ago
Hard if you're in a country with currency exchange restrictions like Argentina (a big adopter).
searchableguy 4y ago
USDC is an ERC20 token on the blockchain. This is required to work with smart contracts and dapps. You can swap USDC for any on-chain asset using uniswap or mix them up using a mixer like tornado cash. It also escapes any capital controls to hold USD which is a benefit for those who are outside US and live in poor or draconian countries.
loveparade 4y ago
No, in many countries you cannot buy USD directly. You also cannot store USD in a local bank account. And in various places it's explicitly forbidden to hold USD as savings because it would devalue local currency if everyone started transacting in USD instead. So, the "C" makes USD exposure available to anyone worldwide, assuming you have e.g. an Ethereum wallet.
- pHollda 4y ago
  If anyone doubts that this is just a theory, I can confirm it. I live in third-world countries and use USDC exactly for this.
  - FabHK 4y ago
    I have lived and travelled extensively in second and third world countries, and almost never had a problem buying or selling USD. Well, in some places there were indeed capital controls (Argentina, China), but that's rare, and I doubt use of USDC is legal then for the circumvention of regulation (which is basically the only use case of crypto).

FabHK 4y ago

That's funny. The USD is entirely unaffected. Some deposits at certain banks are affected for large (mostly professional) holders. Retail investors will be made whole (up to 250k), thanks to this banking regulation thingy you might have heard of. USDC is meant to mirror the USD (sure, with its concomitant FX and inflation risk), but it is certainly not meant to introduce credit risk vis-à-vis some bank most people hadn't heard of last week.

hailwren 4y ago
You’re aware that ~$150B of $200B SVB deposits are not covered by FDIC insurance, correct? I don’t think SVB is going to end up 0, but pointing at 25% of investments being safe and saying “look regulation works so well” seems absurd.
- lukeschlather 4y ago
  All the people involved are institutional investors. 0% of people who have USD savings under $250k are affected by this. On the other hand, anybody who has a significant portion of their net worth tied up in cryptocurrency is affected by this.
  - 101011 4y ago
    Minor correction, people employed by companies that banked with SVB are also heavily affected here.
    - FabHK 4y ago
      Indeed, if your company is in the banking business without understanding the banking business, you might have a surprise coming up. As in most other industries.
  - radlad 4y ago
    ... and all the people and companies those companies banking with SVB have to pay?

lxgr 4y ago

It‘s a bit like expecting physical USD bills to spontaneously combust due to whatever market forces. The value of one USD stablecoin (measured e.g. in various commodities) might well go down, but the redeemability for one USD never should, regardless of the economic environment.