Morgan Stanley ised to take a couple of days as well to wire Euros to my bank account. Never ever was that an issue, or something I wanted to solve by using an almast-but-not-really Euro, or Dollar.

And that's entirely on them, international bank transfers within the EU take mere moments now.

It’s not really any less of a dollar than any other dollar is. All of our digital dollars are just bank liabilities. Circle and Tether are just banks with dollar liabilities. Their liabilities can be transferred on crypto networks rather than traditional bank wires.

> Circle and Tether are just banks with dollar liabilities.

But no regulatory oversight, and no chance for the common folk to prosecute or get their money back if they default.

I am one of the resident crypto apologists here on HN, but there is no way that we should even try to accept what the big exchanges are doing. The whole point of crypto is to have systems that do not depend on "too big to fail" institutions, why are we suddenly trying to find excuses for their BS?

Tether has no meaningful regulatory oversight. Circle has money transmitter licenses in most US states, some of which cover them as a virtual asset service provider, and require specific conditions around the way that they store customer funds: https://www.circle.com/en/legal/usdc-terms

I'm not claiming this is perfect, but it's pretty different.

That's great, but that only eliminates 2-3 classes of fraud from their potential thousands of exploits. We put too much trust in centralized companies to manage decentralized communities, and I'd bet you dollars-to-donuts that Circle will end up complicit in some sort of scheme.

Not trying to make excuses for any of these companies. I'm just saying, in the abstract, there are lots of reasons why an end user would want a stablecoin besides "avoiding regulations". Even if it weren't pegged to a national currency, there is value in having a digital currency that limits its volatility. Pegging to another currency is a shortcut for doing that w/o needing decentralized monetary policy.

Basically these people are trying to get the benefit of digital currencies without the downside of volatility. Somebody else will have to take the volatility risk. This is easy to do when the crypto currencies are going up in value, and almost impossible to do on the downside.

> almost impossible to do on the downside

And yet most stable coins have maintained their peg for years now, despite many of them having gone through 2 large bear markets. If 80%-90% down and still pegged doesn't disprove "impossible to do on the downside" I don't know what could.

Clarification: I do think Tether is not fully backed and is likely to depeg some day, but the assertion that it's "impossible to do on the downside" is clearly not true even for Tether. And it's very clearly not impossible to keep a peg if the peg is fully backed, which may be the case for some coins (without naming specifics). DAI, backed by verifiable collateral, has also done extremely well through 2 bear markets.

> I do think Tether is not fully backed and is likely to depeg some day.

Which is a good reason to get out. Stablecoins have only two stable points, 1 and 0. When they crash, they go all the way. Look at what happened with the stablecoins that already crashed.

1 or 0 is true of government currencies. The unknown is when. For the Bretton Woods USD 'when' was August 15 1971.

https://history.state.gov/milestones/1969-1976/nixon-shock

Maybe but not necessarily. I can log in to Coinbase and buy USDC with dollars in my bank account, use the USDC in a variety of decentralized applications or contracts, and then exchange my USDC for USD again via Coinbase. It’s similar to going to the bank and withdrawing cash, and it has no inherent volatility or downside risk.

Sorry, I did not mean to insinuate anything resembling cover for these stablecoins. I do not own any and I never would. In fact, I only own Bitcoin and I don’t keep any on any exchange at all. This is the only way I would ever recommend when interacting with cryptocurrencies.

It is less of a dollar, because I can say you can exchange it for a dollar when you can not, in fact, exchange it for a dollar when you try to,because I never had enough(or any) dollars. In the real world when the bank runs out of dollars the government will give me dollars instead.

For US citizens perhaps, but if you're a Russian citizen or company, the USD in your bank account is now just a worthless database entry.

Just because that weapon hasn't been pointed at some group of US citizens yet doesn't mean it can't in the future.

Maybe, maybe not. In the meanwhile SBF and similar figures are happy to protect your money in crypto assets.

Not your keys, not your coins. Those not willing to learn self-custody are definitely better off in USD.

> In the real world when the bank runs out of dollars the government will give me dollars instead.

Up to a point.

I think that is a fair critique, but that will be coming at some point, very likely. Either a law requiring 100% liquid reserves, or a law bringing them into the FDIC system.

Not volatile? The point of stablecoins is they’re supposed to match the USD in value. By definition they are more volatile than usd as they are pegged to it and vary in price

> By definition they are more volatile than usd as they are pegged to it and vary in price

I understand your reasoning, and you're correct in this case (assuming your numeraire is USD). However, if your numeraire is something like a GDP-weighted basket of USD, EUR, JPY, and CNH, it's possible for a USD-pegged asset to be less volatile than USD (since your unit of account isn't USD).

Note that if the above is the case, that would imply that the tracking error of your USD-pegged asset is correlated to the non-USD components of your numeraire. In a risk-off/flight-to-quality environment (depending on the exact circumstances, but in general) you'd expect EUR and CNH to drop in relation to the USD and often JPY to rise in relation to USD. The opposite would be expected in a risk-on scenario.

Presumably, your USD-pegged asset would drop in relation to the USD in a risk-off scenario and rise in a risk-on scenario, so in that case it would seem that your tracking error would tend to be correlated to the non-USD components of your numeraire basket. So, if macro risk-on/risk-off are the primary drivers of your pegged asset's tracking error, it would seem that your pegged asset would tend to have less volatility than USD if a GDP-weighted basket of major currencies is your unit of account.

The point is that their prices are less volatile than the prices of "real" cryptocurrencies like Bitcoin.

My first and only experience with stablecoins was when I moved a bunch of Stellaris into one and when I went back to do another transaction a few days later its value had been reduced to zero for 'technical reasons' that I am still unable to comprehend. Whoever was operating it basically helped themselves to a year's worth of investment gains, which soured me on the concept.

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.

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?

> 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.

That is not essential to what futures do. The essence of a future, is that it is a trade that is agreed upon today, but which settles in the future. I sell my corn to you at a price we agree on today for delivery in 3 months. That allows producers and consumers of commodities to reduce risk, while speculators can increase their risk.

Also -- weird but interesting -- the https://en.wikipedia.org/wiki/Onion_Futures_Act bans trading futures contracts on onions (and motion picture box office receipts). Not sure if that would apply to onion seed.

"Onion seeds" was a metaphor for future onions.

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.

Americans that frequently need to transfer money (especially overseas) may find stablecoins a good way to effect that without bank fees and delays.

Other countries may not even be allowed to transfer from their bank overseas (I think China in most cases). Some countries have local currency that is devaluating, and banks that are less reliable than a mattress. Some countries have restrictions on the way that money can be stored or retrieved that basically mean that money deposited in the bank can not practically be withdrawn.

For some, the stablecoin is simply a more convenient bank that the one in the city, and in many cases they anyways don't have reportable income.

Other reasons exists for a stablecoin besides criminal activity, especially for people that live in poorer states - and these people are harder hit by losing their cash than would be someone who is in crypto for the ride. It is disingenuous to think its all crypto kiddies.

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.

Yes, strangely enough, that is exactly what I’m questioning!

They are a terrible idea whose time came and went around 2017.

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

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.

> 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.

Ok, then there's no point in having the stable coin conversation.

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 $.

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.