On stablecoins

[deisik]

If you don't know what stablecoins are, read this Wiki article

With that read, there is an ongoing dispute over the advantages of these coins before Bitcoin and other cryptocurrencies. Many suggest that they are not actually backed up by real currencies or other assets as the companies behind them vigorously claim, that they are centralized beyond any hope, and without proper audits they can be printed out of thin air just like fiat money, which would culminate in their hyperinflation, devaluation and failure

For simplicity's sake, let's assume that these accusations are unfounded. So do these coins have any advantages compared to Bitcoin under given assumptions? In these conditions stablecoins essentially become fiat that they are representing, i.e. the US dollar, Euro, or whatever. So the whole thing is not so much about some stablecoin versus Bitcoin but rather a good old question of a fiat currency versus a cryptocurrency

And I guess you already know the answer to that question

[1714745572]

1714745572

[1714745572]

1714745572

[1714745572]

1714745572

[1714745572]

1714745572

[o_e_l_e_o]

-snip-

If we are assuming, as you say, that these stablecoins are fully backed up by fiat currency, then all you are doing is pushing the problem of printing out of thin air and inflation back a step. Instead of the crypto itself being printed out of thin air, the fiat currency that is pegged to is instead. The end result for the crypto in question is still the same - devaluation.

There would still be advantages over actual fiat in terms of transaction speed and fees, but without the advantages bitcoin brings of true decentralization and capped supply.

[deisik]

-snip-

If we are assuming, as you say, that these stablecoins are fully backed up by fiat currency, then all you are doing is pushing the problem of printing out of thin air and inflation back a step. Instead of the crypto itself being printed out of thin air, the fiat currency that is pegged to is instead. The end result for the crypto in question is still the same - devaluation.

That's one of the things I meant when I said you already know the answer (though I wouldn't call stablecoins crypto)

There would still be advantages over actual fiat in terms of transaction speed and fees, but without the advantages bitcoin brings of true decentralization and capped supply.

And that's the next point I wanted to address but decided to wait until someone points it out

In that very case stablecoins should be considered competitors to fiat payment systems such as PayPal, Visa, Mastercard, whatever. And it remains to be seen whether they actually have any advantages in this league. For example, I often use a local payment system, Yandex.Money. It is instant and there's no fees if I send money to someone else using a mobile wallet

[davis196]

Stablecoins have no advantages over fiat and no advantages over crypto.They are used only as a ponzi scheme and scam projects.They have no other purpose than that.End of discussion.
By the way,Wikipedia can't be used as a trusted source of information.

[mu_enrico]

I think the idea of a stable coin is similar to a bank account balance. There is a big risk associated with custodian accounts, especially about trust. Let's assume they really back it with a 1:1 ratio, thus, the function will be the same as the bank balance (except 24 hours of operation and cheaper tx fees).

Moreover, if they really peg the coin 1:1 with fiat, then by nature, it's safer than the bank balance. This is because banks implement a fractional reserve system.

[figmentofmyass]

If you don't know what stablecoins are, read this Wiki article

With that read, there is an ongoing dispute over the advantages of these coins before Bitcoin and other cryptocurrencies. Many suggest that they are not actually backed up by real currencies or other assets as the companies behind them vigorously claim, that they are centralized beyond any hope, and without proper audits they can be printed out of thin air just like fiat money, which would culminate in their hyperinflation, devaluation and failure

For simplicity's sake, let's assume that these accusations are unfounded. So do these coins have any advantages compared to Bitcoin under given assumptions? In these conditions stablecoins essentially become fiat that they are representing, i.e. the US dollar, Euro, or whatever. So the whole thing is not so much about some stablecoin versus Bitcoin but rather a good old question of a fiat currency versus a cryptocurrency

And I guess you already know the answer to that question

exactly---that's why they aren't competitors to bitcoin at all. they're used for hedging fiat value (ie as a complement to exchanges or banks). they aren't used as p2p currencies or speculative investments.

a centralized (exchange-issued) stablecoin is basically just an "exchange IOU". in the old days, that meant a USD balance on an exchange. now it can mean an exchange-issued USD balance that can be used on other exchanges or in p2p/decentralized markets. they're an improvement to exchanges, not to cryptocurrencies.

[TheReverend]

i think top coin from 1 to 50 can be say stable coin, because price movement are slowly and also follow bitcoin price.
not like other coin,while btc is dumping they pump, but you can make great profit it you have a great timing to buy.

[BrewMaster]

the biggest problem that i see with stablecoins is that they are centralized and not like fiat centralization, but worse since they are issued by a company that can go under or run away. with fiat at least the whole country has to go under for their fiat to become worthless but the stablecoin the company which has a high risk of going under can do that and the coin can become worthless in an instant!

[figmentofmyass]

the biggest problem that i see with stablecoins is that they are centralized and not like fiat centralization, but worse since they are issued by a company that can go under or run away. with fiat at least the whole country has to go under for their fiat to become worthless but the stablecoin the company which has a high risk of going under can do that and the coin can become worthless in an instant!

that's why centralized stablecoins are just extensions of the exchange ecosystem. it's the same idea as USD or EUR balances on exchanges: those can be subject to "money printing" and fractional reserve too. like USDT, they're just issued against an exchange's internal database.

so i think the correct way to approach stablecoins is to judge the reliability of their issuers---just like banks before federal regulation and depository insurance---because it's 100% based on trust.

[avikz]

If you don't know what stablecoins are, read this Wiki article

With that read, there is an ongoing dispute over the advantages of these coins before Bitcoin and other cryptocurrencies. Many suggest that they are not actually backed up by real currencies or other assets as the companies behind them vigorously claim, that they are centralized beyond any hope, and without proper audits they can be printed out of thin air just like fiat money, which would culminate in their hyperinflation, devaluation and failure

For simplicity's sake, let's assume that these accusations are unfounded. So do these coins have any advantages compared to Bitcoin under given assumptions? In these conditions stablecoins essentially become fiat that they are representing, i.e. the US dollar, Euro, or whatever. So the whole thing is not so much about some stablecoin versus Bitcoin but rather a good old question of a fiat currency versus a cryptocurrency

And I guess you already know the answer to that question

Stablecoins are centralized virtual coins and it is mainly used for trading in exchanges or hedging against the falling asset price! I don't see much utility of stable coins apart from these two scenarios! It's a tool for the traders and doesn't really a cryptocurrency per-say.

[andriarto]

If you don't know what stablecoins are, read this Wiki article

With that read, there is an ongoing dispute over the advantages of these coins before Bitcoin and other cryptocurrencies. Many suggest that they are not actually backed up by real currencies or other assets as the companies behind them vigorously claim, that they are centralized beyond any hope, and without proper audits they can be printed out of thin air just like fiat money, which would culminate in their hyperinflation, devaluation and failure

For simplicity's sake, let's assume that these accusations are unfounded. So do these coins have any advantages compared to Bitcoin under given assumptions? In these conditions stablecoins essentially become fiat that they are representing, i.e. the US dollar, Euro, or whatever. So the whole thing is not so much about some stablecoin versus Bitcoin but rather a good old question of a fiat currency versus a cryptocurrency

And I guess you already know the answer to that question

Stablecoins are centralized virtual coins and it is mainly used for trading in exchanges or hedging against the falling asset price! I don't see much utility of stable coins apart from these two scenarios! It's a tool for the traders and doesn't really a cryptocurrency per-say.

as long as I participate in cryptocurrency, it always has high volatility, so that true traders like this. they can make big profits even though they carry a lot of risk, and because crypto is indeed decentralized

[wuvdoll]

Main use of these coins is not having a dollar on an exchange while still having a symbol of it.

Now, if you want to open an exchange that allows people to put dollar (or any fiat) into it and buy bitcoin with it or even withdraw dollar from the exchange you need to have an agreement with a bank and you need to do a lot more securities work for it and get accepted and basically deal with the law a lot more, that is a lot of work to do and causes a lot of troubles for exchanges. Whereas if you just use usdt or whatever stablecoin you want you are not going to have these type of problems, you just put USDT on your exchange and people will basically hold their coins at fiat without making the exchange deal with a bank.

Moreover, the missing point here is that people pay bitcoin or dollars to get those USDT deal and the owners of the Tether organization basically gets free money, yeah maybe they can't touch that money because that would make it a ponzi scheme but putting that money into investments would work as well.

Basically we are making them rich for free .

[magneto]

Exactly. People argue that stablecoins are better in terms of being a store of value, I honestly think that it's the exact opposite.

Sure, there may be volatility in the short term that comes with bitcoin. However, when you are looking at the long run, the value of bitcoin should hedge against inflation nicely, given that adoption stays around the same or continues increasing (which is very likely), due to the fact that it has a limited figure.

Stablecoins are no different to fiat bank deposits. Even worse, these deposits are not secured by anyone, nor is there solid proof that any reserves are there at all. So there is essentially going to be long term depreciation of any value stored in stablecoins, as well as the risk that a "bank run" may happen, while the stablecoin doesn't have sufficient reserves. At the end of the day, it's an extremely risky economic proposition to me.

[exstasie]

Stablecoins are no different to fiat bank deposits. Even worse, these deposits are not secured by anyone, nor is there solid proof that any reserves are there at all.

There are decentralized stablecoins too. I haven't totally wrapped my head around Dai, but it's based entirely on smart contracts and involves no trusted parties. It's a really interesting project with strong built-in economic incentives that drive the price towards $1 rather than relying on trusted custodians and issuers. Check it out: https://medium.com/@james_3093/the-dai-stablecoin-is-a-game-changer-for-ethereum-and-the-entire-cryptocurrency-ecosystem-13fb412d1e75

I'd much rather hold Dai than anything like USDT, but I'd still limit exposure since it's pretty new and experimental.

[Snaic]

If you don't know what stablecoins are, read this Wiki article

With that read, there is an ongoing dispute over the advantages of these coins before Bitcoin and other cryptocurrencies. Many suggest that they are not actually backed up by real currencies or other assets as the companies behind them vigorously claim, that they are centralized beyond any hope, and without proper audits they can be printed out of thin air just like fiat money, which would culminate in their hyperinflation, devaluation and failure

For simplicity's sake, let's assume that these accusations are unfounded. So do these coins have any advantages compared to Bitcoin under given assumptions? In these conditions stablecoins essentially become fiat that they are representing, i.e. the US dollar, Euro, or whatever. So the whole thing is not so much about some stablecoin versus Bitcoin but rather a good old question of a fiat currency versus a cryptocurrency

And I guess you already know the answer to that question

Stable coins are actually needed for ease of use of cryptocurrency. In fact, they are not and cannot be profitable cryptocurrency. Storage of funds on them, as a rule, is temporary. Therefore, I especially do not even care if they are supported by fiat or not. Decentralized cryptocurrency, for the most part, is also not supported by anything. All cryptocurrency is moderately risky and you should always remember this.

[automaticmoney]

Now the market is turning towards stable coins governments and many organizations are showing interest in stable coin hopefully stable coin bring lot of positive branding for crypto currency industry

[haroldtee]

the biggest problem that i see with stablecoins is that they are centralized and not like fiat centralization, but worse since they are issued by a company that can go under or run away. with fiat at least the whole country has to go under for their fiat to become worthless but the stablecoin the company which has a high risk of going under can do that and the coin can become worthless in an instant!

Apparently, there is no other way to it than being centralized since they are tied to a centralized entity anyway. Although, a lot of them, most especially the new ones have claimed they are physically backed by real fiat, but pretty much from what we have seen with Tether over the years, seems like something not worth believing in.

I see them more as a problem than a solution, and the worst part of it is that, their relevance as against using fiat is something that is still questionable. Nonetheless, with the way things are going, if one will have to use stablecoin at all, I guess the best is to just consider the level of transparency and accountability, and see if it is something you can work with as a person. However, if we are to compare centralized to decentralized, I guess we all know which one makes more sense.

[jjjfff]

How are stablecoins different from Disney tokens?

Tokens you trade 1:1 for fiat money, which can be quickly spent at some establishments? Sounds like rollercoaster park or arcade game tokens to me!

[Theb]

i think top coin from 1 to 50 can be say stable coin, because price movement are slowly and also follow bitcoin price.
not like other coin,while btc is dumping they pump, but you can make great profit it you have a great timing to buy.

From what I am reading I am guessing that you really don't know what you are talking about stablecoins really don't follow the movement of Bitcoin or any other cryptocurrencies in the market as if they are they won't be called "stablecoins" to begin with. You won't really see any kind of price jumps greater than 5% as they only move around -/+ .01-.03 increments in a day or won't even move at all. Stablecoins are in fact not for your money if you are thinking that it will grow, people only buy it if they don't want to participate in the price action going on in the market.

[BitHodler]

I see them more as a problem than a solution, and the worst part of it is that, their relevance as against using fiat is something that is still questionable.

This problem (as you call it) is a glimpse of what people can expect the fiat system to turn into. It's just a matter of time before we aren't using fiat as we do it right now, but strictly use stablecoins or more precisely said, tokenized fiat.

What concerns me is that most people are likely to follow any path forward of the government as long as they keep the usability and convenience of fiat, but with a couple of more perks.

This isn't innovation, but purely a continuation of a system that has been in place for many decades. Instead of embracing the revolution and go decentralized we are sucked into more of the same shit.