Re:Another stablecoin loses peg – DEI team working to restor...
by ipnon on Tuesday May 17, 2022 @08:25AM
(#31409461)
What makes central bank currencies special is that institutions like the Fed can "mint" or "burn" dollars whenever they please to maintain the "peg". In reality they're targeting a 2% floating rate of inflation, and the "minting" is done by making loans to banks that are motivated by economic stability instead of profit. Crypto stable coins don't have this luxury because this mechanism is founded upon trust in the central bank's governance and the underlying government.
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Re:Another stablecoin loses peg – DEI team working to restor...
by umanwizard on Tuesday May 17, 2022 @09:00AM
(#31409872)
Correct. You’ve discovered one of the many disadvantages with cryptocurrencies relative to traditional finance.
Re:Another stablecoin loses peg – DEI team working to restor...
by stickfigure on Tuesday May 17, 2022 @10:06AM
(#31410855)
Also the advantage! Sometimes central banks screw up the minting process and severely damage the currency (see: Argentina, Venezuela, Zimbabwe). Historically, currencies are a mixed bag and we should be glad there is more than one.