British pound has enjoyed a long history and was used as a currency for international trade until early 20st century. Then dollar took over.
One could argue it's because USA emerged from WW2 as a super-power.
But it would be foolish to say that only a major war or a fall of the empire will change what currency people use.
I'm not arguing for Terra as it was really a bad design. But it is odd that so many people just reject the idea of cryptocurrencies.
It's a big sandbox, big experiment with thousands of people working on the new primitives. Even if 80% projects are scam or failures, 20% might be revolutionary. The US dollar as it is today went through several iterations
It was kind of a stablecoin in the early days, pegged to the value of Spanish dollar which was more popular. There were also Continentals that failed and many colonial currencies that were outlawed IIRC.
I'm not saying crypto has no value, but I'm saying it's not comparable to a modern currency. You might be right that it's similar to some historical examples of weak upstart currencies most of which failed, but even those were backed by a lot more than just... what? In this case we're literally comparing to currencies that are often backed by nothing.
Well, yeah, most currencies are defacto backed by military force. That fact creates bad incentives.
Crypto doesn't have this luxury, it can be only be backed by the trust in code. If the currency is trusted - because it's open-source, open for all to use, is well designed - it's value is going to go up. See Bitcoin and Ethereum as best examples of this.
This make a decision whether to use a particular coin similar to choosing Python vs JVM and their ecosystems.
To be fair, I don't think stablecoins work well in that context. The information on how they are backed is not completely public, the companies issuing stablecoins are not that well audited...They are blobs of closed-source "stuff" that look like 1$
The theory is that the market can efficiently decide whether the code actually does work. But the practice is that you can make billions tricking people about what the code does. And often it's people who have never even glanced at the code telling you what it does. I would wager good money that there was no one invested in UST that understood the code.
Your argument reminds me of the Politician's fallacy, which goes like: "we should invest in an alternative asset in case the US dollar fails, cryptocurrency is something, thus we should invest in cryptocurrencies." Go read this thread to understand the numerous criticisms of cryptocurrencies and then think why any of the existing cryptocurrencies should be worth beyond $0 (or slightly more, I admit they are novel and thus could be a collectible).
The British Pound is still worth about the same proportionately to the dollar as it always was, and no-one would look at you funny for paying for stuff in pounds.
This turkey found that, on his first morning at the turkey farm, he was fed at 9 a.m. However, being a good inductivist, he did not jump to conclusions. He waited until he had collected a large number of observations of the fact that he was fed at 9 a.m., and he made these observations under a wide variety of circumstances, on Wednesdays and Thursdays, on warm days and cold days, on rainy days and dry days. Each day, he added another observation statement to his list. Finally, his inductivist conscience was satisfied and he carried out an inductive inference to conclude, “I am always fed at 9 a.m.”. Alas, this conclusion was shown to be false in no uncertain manner when, on Christmas eve, instead of being fed, he had his throat cut. An inductive inference with true premises has led to a false conclusion. (via Alan Chalmers, What is this thing called Science, 2nd edition, University of Queensland Press, St. Lucia, 1982)And was it a fully general argument against induction, or do you disagree with the conclusion you were promoting?
The problem is that you don't care if a stablecoin collapses tomorrow; you care if it collapses in the next 50 years and "the stablecoin hasn't collapsed in 50 years so it won't collapse in the next 50 years" obviously doesn't apply.
Fully backed stablecoins (all other popular stablecoins with the arguable exception of Tether) are not perpetual motion machines.
https://news.ycombinator.com/item?id=31381864
Tether is large because it got a head start on network effect before the proper regulatory frameworks were put into place, in the USA at least. There's a massive amount of momentum there even though their product is inferior.
GUSD backing, also audited by a large US accounting firm, subject to New York State Department of Financial Services regulations: https://www.gemini.com/cryptopedia/gusd-stablecoin-gemini-do...
USDP backing, also audited by a large US accounting firm and subject to New York State Department of Financial Services regulations: https://paxos.com/usdp/
DAI backing, viewable transparently on-chain. Currently backed 168% by collateral: https://daistats.com/#/overview
LUSD backing, viewable transparently on-chain. Currently backed 189% by collateral: https://dune.com/dani/Liquity
UST (Terra/Luna) and USDT (Tether) have/had nothing like this.
TerraUSD (UST) was hyped up and became popular mainly because the network paid 20% APY interest on UST deposits, which is a way higher rate on a "stablecoin" than you can get anywhere else (rates in much safer protocols are about 5-8% right now). Obviously a 20% interest rate is unsustainable when it's supported by money printed from thin air. But people were either unaware of this (unsophisticated investors), chose to overlook it (calculated risk-takers, RIP), or positioned themselves to be able to find a chair right before the music stopped (institutional investors like Celsius).
2. "Algostable" coins are experimental, and this one was propped up by ponzinomics on Anchor. It is not comparable to collateralized stablecoins, and claiming otherwise is intellectually dishonest.
2. Collateralized stablecoins are stable insofar as they actually have enough liquid collateral to redeem. None of these coins have even remotely been tested yet.
Yes, I do think the holders have been scrambling to exist - one guy lost $4M trying to swap for USDT - but I think it's not Tether cashing it out, but instead exchanges eating the losses.
That can only get you so far. The failure mode is a step function.
> When in the last five years have you had difficulty cashing out USDT, USDC, or DAI at dollar value?
You could have said the exact same thing about Terra/UST right until sometimes last week. It works until it doesn't.