Although the current government is having a good go at reducing the value of the currency, it's barely budged on the chart.
This is the only new thing. Maybe.
check binance & other markets - e.g convert USD 10 to USDC
Of course, if you're a US citizen transferring 200k USD from Chase to Bank of America, crypto doesn't make any sense.
Definitely not lower class people like you seem to imply (or perhaps I'm just reading into it?)
What, in your opinion, are your options for transferring abroad the cash you got from selling your hard-earned assets?
the trouble seems to come when the credit union decides it needs to “scale “ sort of defeating the original thing that made it any good. perhaps that comes from just greed (ie the ability to charge fees on a larger customer base) or maybe it’s a requirement of the costs of providing an ever-widening array of newly “expected” services.
I do hope regulation drives Tether out of business.
> I agree that a centralized US dollar CBDC that isn't run by scammers would be a simpler way to do this.
I don't think it's a stretch to imagine that the government would ban all other stable coins and strictly control what "valid commerce" is allowed to be done with the centralized coin (see Operation Choke Point)
People hold dollar-backed stablecoins because they believe the US dollar to be the most durable unit of account on the planet.
All the proof you really need for that is that most crypto users outside the US still consider the value of their crypto tokens in terms of how many US dollars it’s worth.
The author of this article talks about this being a “parasite” to the US monetary system, but it’s hard to think of a better thing that could’ve happened for the US. Not only has it reinforced that dominance… it’s also driven hundreds of billions of dollars of US treasury bills purchases from providers like Tether and USDC.
It’s like the 2008 crash: people speculating because they think housing never goes down, except a market-scale drop can trigger an uncontrollable rush for the exit. With banks and companies permitted to hold coins as assets, the impact is broad but impossible to regulate ex ante, and difficult to model monetarily.
It’s what I would do if I were Putin and Xi, frustrated with the western controls on the banking system (that have mostly enabled us not to have to go to war).
Keep in mind stablecoins aren't a product built for Americans, they're built for people outside the US financial system to give them access to some of the benefits of the US's relatively solid money.
In 2022 when confidence in stablecoins plummeted after the Terra collapse, $20 billion in Tether was liquidated in a month - $10 billion of that in a single day: https://www.coingecko.com/en/coins/tether
Through that black swan event Tether did its job, processing redemptions for collateral dollar for dollar.
what about situations where centralized ledgers won't serve you? e.g. someone who wants to buy drugs, or sex workers want to get paid. And you mention "niche counter-culture solutions" but I don't think it's so niche - in 2002, the government of Argentina stole 2/3rds of everyone's savings by forcibly converting their dollar-denominated bank accounts into pesos at a terrible exchange rate. Not having to worry about this because you have a trustworthy government is nice, but it puts you into an elite class of your own.
Do cryptocurrencies provide value to people living in third-rate hellhole countries? Perhaps, because they are connected to the outside world. Ideally you could just have a foreign bank account that your country cannot touch. If the big governments gang up on crypto exchanges, then crypto will be worthless. The only reason they don't gang up on the exchanges seems to be that they (the people in government) use crypto for nefarious activities and money laundering.
The technological innovations of cryptocurrencies make for good thought experiments or puzzles, but serve as a distraction from their inevitable uselessness.
I don’t understand your point. You said that crypto is only useful as long as governments use it for nefarious purposes and money laundering — so basically it’s a guaranteed relevancy in the future, no? How is that inevitable uselessness?
It's hard to say how long those nefarious purposes will be tolerated. There may come a time when the governments of the world don't even have to pretend to not be doing nefarious shit. At that point, cryptocurrencies will only be a thorn in their side, and will be under heavy attack.
Doesn’t solve the problem as these assets can still be seized by foreign governments.
How easy is it from most people in the world to "just" open a bank account in another country?
The problem stablecoins are solving are self-inflicted: KYC to open a bank account, restricted nationalities, account freezes, capital controls, taxation over-reach, etc.
At some point someone figured out that if they start over, there is a lot of “value” to be unlocked out there; and paid/lobbied/sponsored the right person to execute on that.
I think you’re right to criticize crypto as a techno-elite project. However I think stablecoins have a legitimate use case for billions of people who don’t have access to good banks, or a stable currency, and can’t afford traditional fees. IMO it’s one of the best things to come out of crypto.
As I understand it, many countries in the European Union use distributed ledgers for elections. Essentially it lets you cross reference votes and store that database across servers in multiple countries. It also prevents post-election data tampering by the state holding the election.
My understanding is this this system is not an open to every random Joe who wants to have a server (like bitcoin is). I think you still need to be a state actor to be part of the distributed database (so it's not a zero trust environment).
(Unfortunately, I don't have any good links to back this claim up)
Stablecoins are not speculative or investments at all - their price stays the same. That's where stable in stablecoin comes from.
You see crypto and think day trading
TerraUSD enters the chat
You're right that they aren't speculative in the financial sense of "hopefully gaining value over time", but you do speculate (in the more general sense) on the fiat-pegging mechanism(s) to work to preserve the value you are storing in them...
I feel like at this point there isn't anybody defending stablecoins who isn't using them primarily speculative investment/trading. There has yet to be a usecase for distributed ledger that isn't solved better by a centralised ledger other than niche counter-culture solutions whose users are typically blinkered to the fact that they are already a self-selected techno-elite who can't bring their utopia to the commons. That ended a bit more nasty sounding that I intended, apologies.