The structure of risk is similar for both Tether and Circle, AFAICT. While USD risk is heavily distributed across many regulated banks and there are measures in place to mitigate bankruptcy, USDC/T is fairly centralized and the fall of a single bank can put the entire currency at risk, cause sudden and extreme inflation (as is the case now), and potentially stop being accepted by even more merchants.
USD risk exists, but seems lower than USDC/T risk, and the same is true for its volatility. All in all, I am not surprised that there are more merchants that accept USD than USDC/T, and the change in methodology that would make the latter competitive would likely require taking a page from the Federal Reserve, not vice-versa.
Nobody pricing interest rate risk would have priced what happened last year correctly - it would have been considered a one-in-a-million event, not a routine response to high inflation.
This trained everyone to speculate that the Fed was ignoring inflation on purpose and they should allocate accordingly.
So many people unbuckled their seatbelts as the driver sped through several red lights while saying he wasn't even planning to touch the brakes. When he did eventually slam the brakes a moment later, the passengers flew through the windshield. The driver deserves blame, but blame him for speeding, not for slowing down -- the latter is the only responsible thing he did.
The places where I've seen this mostly work was near borders, and it makes sense that you'd accept the neighbour currency there even if it is some overhead. If you can quickly hop over the border you're much less likely to exchange currency before than if you plan a full trip in a different country.
At least in Australia, I'd be surprised if more than a single digit percentage of the population would be able to tell if the (US) currency someone presents is real vs pretend/monopoly money.
They'd most likely thing the person is trying to scam them.
Mexico, Costa Rica, Panama, Nicaragua, Belize, and Colombia are places where I’ve done this personally and lots of Europeans were doing the same.
Friends and family in Costa Rica even advised that local currency wasn’t necessary and suggested bringing crisp bills from my bank.
But now that you point out "developing countries", that does seem more likely. :)
Or at least nicely told to go and exchange it for real money (local currency) somewhere, then come back and try again. :)
If it's in advance of giving you your coffee, no, they could demand you pay in dogecoin only if they wish.
And your specific comment that started this didn't read like you are only argued about developing world. My 2c.
(In small towns it may be more difficult, but not impossible, specially if you are nice.)
Here are a few cherry picked examples
https://www.reuters.com/world/americas/half-payments-caracas...
https://www.tripadvisor.com/ShowTopic-g293974-i368-k4798488-...
https://www.voanews.com/a/lebanon-leans-on-us-dollar-to-cope...
In most cases e.g. a French tourist would be fine taking euros, but a British tourist can take pounds and not pay to convert to dollars or euros first.
Kenya and Egypt are two examples.
I've seen Americans try to pay for taxi's in Thailand with USD, the drivers aren't interested, it's a hassle more than anything. In cambodia on the other hand, yes, they'll take it.
Depends entirely on how stable the local currency is, if it's reasonably stable and well managed then probably they won't be interested.
In other words, money.
_Libya_
2008 https://www.cfr.org/blog/libya-shunning-dollar (Libya Shunning the Dollar?)
2011 Invaded
_Iraq_
2000 https://www.cnn.com/2000/WORLD/meast/10/30/iraq.un.euro.reut... (U.N. to let Iraq sell oil for euros, not dollars)
2003 invaded
2006 https://www.aljazeera.com/news/2006/2/14/syria-picks-euros-o...
No direct invasion but proxy war (lessons learned).
Even in those parts of Mexico and Caribbean countries where the economy is heavily dependent on US tourism - and the US dollar will be accepted at retail shops; the price difference between paying in dollars and paying in local currency is going to be against the US dollar, and for any significant transaction, you will be better off paying in the local currency.
More to the point, it is true that a considerable part of international trade is conducted in USD. It is also true that the USA tries very hard to keep it like that (more so through economic sanctions than the military might), but it's hyperbole to state that any country that does not accept USD will get attacked.
For example, India and China buy a non-trivial part of their oil in roubles and have not been attacked - so far.
How could you mistake a coffee shop for a country?
Seems like you want to misread me on purpose?
If they get a deal with an oil selling country that says otherwise, USA sends in the army (usually to the seller, not the buyer).
You said "countries that depeg". Pegging, in the context of cryptocurrencies and regular ones, means something specific: ensuring that the exchange rate between the 2 is fixed within a certain band. I don't believe that the US is threatened by whether other countries peg their currency to the dollar or not.
The dollar's use as reserve currency is a separate matter.
I assume per your definition of "country" Norway should be a country as well.
Norway is a major party in selling oil and gas, but doing it so in NOK. Norway is not even part of NATO. At least until now.
So when do you expect an attack by the USA military?
"In Consideration of the assignment described under Article 2.1 above, Buyer shall pay to Seller a post tax amount of NOK [zz] ([zz]), ref. Article 5."
https://offshorenorge.no/globalassets/dokumenter/naringspoli...
Also the measurement is NOK: https://www.norskpetroleum.no/en/production-and-exports/expo...
NOK is recommended. That document doesn't say what currency is used for actual transfers.
Its neighbors Sweden and Finland are EU members whose citizens have recently come to widespread agreement that NATO membership is desirable.
Odd… because the head of NATO is Norwegian.
Your entire comment is completely misinformed.
The USD has value because you need to pay your taxes in USD, and if you don't pay your taxes, the government will take away your freedom. It has nothing to do with people in other countries transacting in that country's local currency.
If it was about taxes people would just hold something else and converted some temporarily to pay their taxes leaving government with currency nobody wants.
It's all about people's trust and willingness to store savings and make loans in a given current.
Wouldn’t this expose those people to exchange rate risk that they could completely avoid by holding USD instead?
Not following this at all. You having to pay tax in USD means you're going to prefer holding USD and being paid in USD as well. Anything else would be strictly inferior, as now you have to worry about doing conversions all the time.
Note that it's mandatory for taxes to be withheld with each paycheck, and those withheld taxes must be paid in, you guessed it, USD, so you must be paid in USD as well.
Huge part of the world have to pay taxes in their local currencies and yet prefers storing savings in USD.
> Anything else would be strictly inferior, as now you have to worry about doing conversions all the time.
You weight it against other pros and cons. Even US billionairs do not store their savings in USD cash, and don't seem to mind "conversions all the time".
The federal reserve could stand to learn a thing or two, honestly.