The main harm of existing “Stablecoins” this is a pyramid scheme

[VictorProsh]

The main harm of existing artificial “Stablecoins” is uncontrolled emission and, accordingly, uncontrolled inflation.
Today, anyone can create and print their “Stablecoins” without control, thereby increasing the total issue of the financial bubble. Is it possible to do without artificial “Stablecoins” based on Fiat, which essentially create a pyramid scheme or not, what do you think?

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[_act_]

Stable coins is uncontrolled inflation? Yes and No.

But the government are the ones that are controlling the value of fiat, they devalue it when necessary. If stable coin is backed by or pegged with fiat, that means its value in price is equivalent to the price of fiat, just like USDT (stable coin) and USD (fiat). If fiat is devalued, then automatically stable coins are devalued.

But some stable coins are pegged with unstable coins just like wBTC that is pegged with bitcoin, or just like some cryptocurrencies like paxgold are pegged with gold price, those are not inflationary coins.

[Smartprofit]

The main harm of existing “Stablecoins" is uncontrolled inflation.
Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?

I do not entirely agree with this statement  (sorry, replied to another post).

In my opinion, if we believe that 1 USDT (tether) = 1 US dollar, then no action by the US Federal Reserve will change the fact that money surrogates (digital copies of US dollars) circulate in the global monetary system.  If usdt is used to pay for goods (works, services), then they increase the money supply and contribute to an increase in inflation.  

The US Federal Reserve can take various measures to combat inflation (raise the refinancing rate, buy back government bonds), but if money surrogates are used in parallel for calculations, this has a negative effect on inflation growth.  

Here the question is different ... Are stablecoins used to purchase goods (works, services)?  Or are they virtual instruments for trading in the cryptocurrency markets?

[VictorProsh]

The main harm of existing “Stablecoins" is uncontrolled inflation.
Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?

I do not entirely agree with this statement.  

In my opinion, if we believe that 1 USDT (tether) = 1 US dollar, then no action by the US Federal Reserve will change the fact that money surrogates (digital copies of US dollars) circulate in the global monetary system.  If usdt is used to pay for goods (works, services), then they increase the money supply and contribute to an increase in inflation.  

The US Federal Reserve can take various measures to combat inflation (raise the refinancing rate, buy back government bonds), but if money surrogates are used in parallel for calculations, this has a negative effect on inflation growth.  

Here the question is different ... Are stablecoins used to purchase goods (works, services)?  Or are they virtual instruments for trading in the cryptocurrency markets?

Any stable linked to fiat automatically increases inflation by the amount of its issue. Therefore, if this inflation threatens the economy, the authorities will find a way to impose sanctions. Centralized finance and decentralized finance should and will exist in parallel and complement each other transforming. Gradually, Fiat will be replaced by a decentralized cryptocurrency. The cryptocurrency was created not for virtual owners, but for real ones, which means there will be a real departure from centralized finance.
https://bitcointalk.org/index.php?topic=5394081.0

[kryptqnick]

Stablecoins like USDT manage to live up to their names so far and keep the price at a very stable level. What they don't do is they don't solve the inflation which fiat suffers from. So is USDT=$1, but the dollar's inflation is an 8%, it means that people actually lost around 8% of their purchasing power (roughly, but actually they could lose way more on certain products and way less on others). Also, the op's right of the hypothetical risk of a stable coin just exploding eventually, when there's a panic selling event and people realize that this stability of stable coins isn't really backed by dollars or anything else of significant value.

[jackg]

Stablecoins need a stable demand and supply model to function and remain useful.

There are times when there has been a big divergence between the price of a stablecoin and fiat but afaik this could be mitigated by developers.buying and selling them based on dollar exchanges and having collateral for them.

I don't think inflation is considered a problem internally by economists (it's just an acknowledgement to look like they care when prices of things go up).

[noorman0]

Any stable linked to fiat automatically increases inflation by the amount of its issue.

Do you mean anyone can simply create a stable coin without a backing equivalent asset?
Nope, regulations regulate how to issue stable coins especially fiat or other tangible commodities reserves where it cannot be withdrawn as long as its stable coins are in circulation (unless they are renewed when obsolete), and issuers must report their reserves every period. Then coin-stable inflation occurs as fiat represents it.

[Hydrogen]

There are claims of residents in high inflation regions like turkey, argentina and venezuela using stablecoins like tether (which are pegged to the US dollar).

As a means of protecting their wealth against high(er) inflation than the united states has.

Stablecoins being a tiny sliver of the global economy, it is difficult to imagine a scenario where stablecoin markets represent a significant chunk of a critical asset bubble.

Tether is the largest and most famous stablecoin with a market cap of $82 billion. A crash there won't rival derivative asset bubbles like the subprime mortgage CDO bubble of 2008.

Bitcoin's market cap at $1 trillion at most, is still a small fraction of the $20 trillion dollar US economy.

I see people trying to engineer a scenario where bitcoin and crypto represent a dire threat to the global economy. Earlier this year, nobel prize winning economist, Paul Krugman attempted it.

[goaldigger]

The main harm of existing “Stablecoins" is uncontrolled inflation.
Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?

Stablecoins can’t address the inflation issues, they just follow it and so far USDT and other stablecoins remain stable despite of the inflation. You cannot just create or print stablecoins, it requires a lot of works so technically the supply is not that big but still they are able to maintain its value. There are some country who are using USDT already because of the high inflation on their country, this serves as an alternative for them. Cryptocurrency can address the inflation, or at least gives a higher value compare to fiat money but you must consider volatility first before trying any coins/tokens.

[VictorProsh]

Stable coins is uncontrolled inflation? Yes and No.

But the government are the ones that are controlling the value of fiat, they devalue it when necessary. If stable coin is backed by or pegged with fiat, that means its value in price is equivalent to the price of fiat, just like USDT (stable coin) and USD (fiat). If fiat is devalued, then automatically stable coins are devalued.

But some stable coins are pegged with unstable coins just like wBTC that is pegged with bitcoin, or just like some cryptocurrencies like paxgold are pegged with gold price, those are not inflationary coins.

You're wrong. Where did the capitalization of these unstable coins come from? The amount of money spent on the acquisition remained in circulation and the capitalization of these coins was added to it.

[odolvlobo]

The main harm of existing “Stablecoins" is uncontrolled inflation.
Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?

If we assume that stablecoins are fully backed, then there won't be any inflation since the stablecoin replaces the money that backs it.

[Xampeuu]

The main harm of existing “Stablecoins" is uncontrolled inflation.
Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?

stable coins will not increase or decrease in value. so saving it will not make our assets go up. In fact, its value will decrease if it is aligned with the current inflation rate. Suppose we buy goods for the future, of course, the price of the goods will rise. therefore it all depends on our goal of using stable coins, will be profitable and will be detrimental. traders need stable coins to trade, and this helps a lot

[NeuroticFish]

The main harm of existing “Stablecoins" is uncontrolled inflation.
Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?

It widely depends.

If a stablecoin is properly and fully backed by the "thing" it replaces - usually USD, then there should not be artificial inflation.

The problem starts when stablecoins are not baked. And here there are at least two problems: those using the not-backed stablecoin face themselves the risk of finding themselves holding a bag of coins with no value (for example many gold-pegged stablecoin projects were for example not backed and they're long gone), and yes, the other problem is that it can cause artificial inflation. Still, maybe the oldest stablecoin and surely the most well-known one, USDT, has a long history of not being properly backed, yet people still accept it and use it, helping the crypto market being (somewhat?) artificially inflated.

In theory, one should DYOR and avoid the fishy ones. Sadly, the reality shows that this doesn't happen.
The only good news seems to be that at least the newcomers in the stablecoins "market" seem to have proper backing (or at least most of them).

[kesmex]

The main harm of existing “Stablecoins" is uncontrolled inflation.
Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?

stable coins will not increase or decrease in value. so saving it will not make our assets go up. In fact, its value will decrease if it is aligned with the current inflation rate. Suppose we buy goods for the future, of course, the price of the goods will rise. therefore it all depends on our goal of using stable coins, will be profitable and will be detrimental. traders need stable coins to trade, and this helps a lot

Basically stable coins are still needed in crypto and I think everyone uses stable coins not to invest but use them to store assets,
For example, BUSD or USDT is proven safe to store assets,
obviously it's back again as you said that it depends on how we use stable coins

[VictorProsh]

The main harm of existing “Stablecoins" is uncontrolled inflation.
Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?

stable coins will not increase or decrease in value. so saving it will not make our assets go up. In fact, its value will decrease if it is aligned with the current inflation rate. Suppose we buy goods for the future, of course, the price of the goods will rise. therefore it all depends on our goal of using stable coins, will be profitable and will be detrimental. traders need stable coins to trade, and this helps a lot

Basically stable coins are still needed in crypto and I think everyone uses stable coins not to invest but use them to store assets,
For example, BUSD or USDT is proven safe to store assets,
obviously it's back again as you said that it depends on how we use stable coins

And how do they differ from a regular debit card?

[NeuroticFish]

And how do they differ from a regular debit card?

While stable coins may be used like "a regular debit card", their actual real use is different:
* unlike for debit card, stable coins can be used without KYC (of course, in less and less situations, unfortunately)
* stable coins can be used for transferring value fast between different platforms. This happens (is settled, final) much faster than debit cards.

Stablecoins initial use was for traders, maybe even especially for arbitrage trading.
Nowadays many use it against Bitcoin price drops or other use cases adapted to their needs, especially no-KYC needs.



If you see stablecoins "like a debit card" and "like fiat" inflation makes fiat value drop, it can be also seen as inflating Bitcoin. That part cannot really be changed...

[hugeblack]

Personally the definition of stablecoins is a database value that stable the value of your balance within central platforms and therefore you should think about it like this basically, allowing withdrawal from platform, conversion between Cexs/Dexs and others in a good idea but ultimately stablecoins are limited to trading .

Thus, they are not directly linked to inflation ( Inflection increase per year/month while trading changes in short-term,) but the promises of the platform that keeps its stability.

Therefore, it is an intermediate stage in trading, instead of turning your profits to cash and then its deposit in the future, comes down to provide speed and low fees but otherwise, they are not "fundamental value" outside the platforms.

[davis196]

The main harm of existing “Stablecoins” is not controlled emission, but, accordingly, inflation.
Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?

Inflation is mostly caused by the controlled emission,so your statement seems kinda meaningless to me.
I agree that the main problem of the stablecoins is the "fractional reserve banking",which can potentially create value out of thin air.Nobody knows how big the Tether reserve actually is.This applies to all the other stablecoins as well.
The main purpose of stablecoins is not to act like a store of value,but to make cryptocurrency trading easier and more convenient.The stablecoins aren't competitors of Bitcoin and the big altcoins.They are supposed to be a supplement of the cryptocurrency trading ecosystem.

[_act_]

The main purpose of stablecoins is not to act like a store of value,but to make cryptocurrency trading easier and more convenient.The stablecoins aren't competitors of Bitcoin and the big altcoins.They are supposed to be a supplement of the cryptocurrency trading ecosystem.

It depends on what we called stable coin, the ones that are backed by gold and have gold price and the ones that are backed by bitcoin and have bitcoin price can be said to be deflationary. They are also stable coins because their price is stable with the price of the asset they are backed with just like wBTC that is pegged with bitcoin or PaxGold that is pegged with gold just in my previous explanation. But about the ones that people most commonly call stable coin because they are pegged with fiat, I can assume that they are inflationary but not directly but indirectly as the fiat they are backed with are declining in price, they too are reducing in value.

[VictorProsh]

Any stable linked to fiat automatically increases inflation by the amount of its issue.

Do you mean anyone can simply create a stable coin without a backing equivalent asset?
Nope, regulations regulate how to issue stable coins especially fiat or other tangible commodities reserves where it cannot be withdrawn as long as its stable coins are in circulation (unless they are renewed when obsolete), and issuers must report their reserves every period. Then coin-stable inflation occurs as fiat represents it.

The total capitalization of stablecoins has exceeded $180 billion and further growth is endless.
https://coincodex.com/cryptocurrencies/sector/stablecoins/