Unbacked stable coins are a big danger

[makishart]

We have Bitcoin and it is a very good coin.
Many people are in favor of Bitcoin because it is a store of value and we can hedge inflation against it.
But many people are afraid of Bitcoin’s volatility because Bitcoin has been very volatile. For example Bitcoin was at 31,000 USD last year in summer, at 42,000 USD last year around christmas and is at 69,000 USD now. It is still very volatile.
To solve volatility, many people have bought so called stable coins.
A stable coin  is a stable coin because it is stable  - not volatile. But when reviewing such a stable coin, we can spot many dangers:

Only 1 or 2 bad stable tokens which are not backed. The rest is fine. So, With what people saved the value of their assets if it was not going through stable token? BTC can make you lose even you did nothing. Converting it to the fiat money? no way!!!

I ain't willing to pay fees anytime when i was converting my fiat to the stable token.

Stablecoins are no solution

Stablecoins are no solution. It might be stable for some time and can work but at what cost? At a high cost!

you are too late to saying this. Been years used stable token and nothing happened.   It's a fiat money!!!!!

Unbacked stablecoins should be illegal

Unbacked stablecoins should be illegal. Because why should it be allowed to provide such a crap and have no insurance?
Every distributir of stablecoins should prove a backing of such stablecoins.
I fit is a 1-Dollar stablecoin, it needs tob e backed by 1 dollar.
If it‘ not backed, it should not be allowed tob e traded because it is huge risk for boyers in case it is getting hacked or collapsing.


For our coins to be safe, we need to avoid unbacked stable coins because of risk.

If you meant about algoritmic stable token and i'd said yes but since there have been many stable tokens were fully backed and this is also making the situation even better. Many people have avoided any unbacked stable token now.

[JeffBrad12]

being backed doesn't mean it should exactly reserve $1 nowaday, so many coin are backed by other asset which value equal to the total circulating supply of the stablecoin, doesn't mean they are not backed literally but just means that they are not necessarily need to be backed by real money, only value will suffice.
it too happen to most of algorithmic stablecoin where they try to overcollateralize their stablecoin with an asset that worth more than the circulating supply and I think thats fine, but certainly with algorithmic stablecoin and their complex algorithm there certainly need to be testing first in case of attack like what make UST collapse in the first place.
I doubt if taken care correctly, being overcollateralized, will pose any problem at all but you know sometime there's something that get overlooked and causes exploit causes depegging, but so far stablecoin that is backed by real asset with low fluctuation are fine.

[Belarge]

   Stablecoins are cryptocurrencies whose market value is tied up to another currency or to external references. They are more useful  than being more volatile cryptocurrencies as means of exchange . Stablecoins are fasten to the U.S currency that is dollar also to a commodity like gold.

   Stablecoins try to get price stability by maintaining to keep for later use asset as collateral or through algorithmic formulas which are suppose to control supply.

   It aims at providing and offering a choice to high volatility of most popular cryptocurrencies including Bitcoin.

We have popular crypto that are mainly for strict purposes. We should making good decisions that will enabled everyone to be milking the system back to back, atleast everyone needs the evidence of their investment to start showing in their various portfolio. Stablecoins are now preferably stated as one of safe measures to convert your assets whenever the market seems to be experiencing heavy bear season. We're here to look out for each other and always ensure we're milking the system with solid strategy.

[Sayeds56]

b]Unbacked stablecoins should be illegal
[/b]
Unbacked stablecoins should be illegal. Because why should it be allowed to provide such a crap and have no insurance?
Every distributir of stablecoins should prove a backing of such stablecoins.
I fit is a 1-Dollar stablecoin, it needs tob e backed by 1 dollar.
If it‘ not backed, it should not be allowed tob e traded because it is huge risk for boyers in case it is getting hacked or collapsing.


For our coins to be safe, we need to avoid unbacked stable coins because of risk.

Your concern regarding unbacked(not backed by real Dollars, Euros or any other prominent fiat currency) stable-coins is indeed valid, and it has been subject of debated among regulatory authorities, as they lack fundamental guarantee that their value in the ratio of 1:1 will be maintained.
This can pose risk for users and the broader financial system if they were to fall or collapse.

It is the responsibility of regulatory authorities in every country to take appropriate actions to safeguard public interest effectively.

[mindrust]

Impossible to avoid stable coins completely anymore. The gene is out of the bottle. Even if you hodl your crypto in a cold wallet, its dollar value is decided by the stable coins. That's because everybody is trading crypto against stable coins for the last 3-4 years now. If stable coins go down one day, they will take crypto down with them. In other words, stable coins are too big to fail now and there is nowhere to run. Like I said, even if you hodl only btc and hodl them in your cold wallet, you are still somehow getting affected by the stable coins. You may not use or hodl stable coins, it doesn't matter. Everybody else does.

[Sophokles]

Stable coin is not a solution, as it inherit the same problem of its original form, which is inflation. It also lose its purchasing power everyday but a stablecoin might not be a solution but a necessity to conduct everyday trade. It is not possible to run a business with a volatile asset, as it will create a difficult environment to get the right valuation all the time. So till we have a better alternative to this problem we need some kind of stable form of medium of value transfer, and stable coin is serving that purpose right now.

[Bushdark]

   Stablecoins are cryptocurrencies whose market value is tied up to another currency or to external references. They are more useful  than being more volatile cryptocurrencies as means of exchange . Stablecoins are fasten to the U.S currency that is dollar also to a commodity like gold.

   Stablecoins try to get price stability by maintaining to keep for later use asset as collateral or through algorithmic formulas which are suppose to control supply.

   It aims at providing and offering a choice to high volatility of most popular cryptocurrencies including Bitcoin.

I could remember a stable coin that I saw that worth not less than $2 and I now remember that such kind of project can never last long.
Many time scammers try to create stablecoins luring investors that know nothing about the crypto market to invest there fund and later the coin disappears. We just have to be at an alert and take cautions so that we don't put money in a projects that would crash immediately and left us with nothing. The crypto market is a very good place we could make money for ourselves but any stablecoin that is not backed by a currency should be ignored.

[el kaka22]

All stablecoins are a little bit dangerous, not just the non-backed ones, we are talking about all the ones, we are having trouble with every single one, so we should be careful with what we are doing so that we could actually do fine with whatever we have.

It is not really a simple thing, because we are talking about basically fiat, but in crypto form and backed ones are companies so we are trusting people with our money and it's risky. I am not saying unbacked ones are not risky, the yare risky too, probably even riskier, but we should be remembering that we are not going to end up with anything better. I am feeling like things going to get better eventually and we should consider how we could get better with time as well.

[Dailyscript]

We have Bitcoin and it is a very good coin.
Many people are in favor of Bitcoin because it is a store of value and we can hedge inflation against it.

When there is  bitcoin, i don't see a reason to of going for stablecoin, we can only hold our asset in it for a while before we exchanger it for bitcoin, there are many advantage in which we can have in holding bitcoin over stablecoin, such could be as it has been highlighted having proof over inflation, we can as well earn profits in holding our asset in bitcoin than when we do with stablecoin, some have believed that stablecoin is just a crypto but has similarities of fiat because of the value and influence of inflation as it has been pegged with USD.

Bitcoin are for true investors who do not fear the market condition. While Stable coins are for people who save their money in crypto backed by fiat. They are scared if the volatility of the market to invest in any cryptocurrency and at the same time afraid of keeping their money in their local banks while it loses its value. So they find a way to store their fiat in a crypto related platform backed by their fiats but i see no sense in that because if is backed by any fiats whenever the price starts dropping in local banks its starts dropping in the crypto space as well.

Whats now the significance of storing in stablecoin when once can invest in a more promising coin.

[Webetcoins]

You are right, unbacked stablecoins are dangerous and should be avoided at any cost, and who is going to do that? The person buying and using them. Yes, it's our responsibility to do our research before we start using a stablecoin just to stay safe from such things because whether authorities intervene and get such stablecoins banned or not, we need to make sure we are safe from them.

How can we forget to mention UST when we talk about unbacked stablecoins? UST was an algorithmic stablecoin created by Terra, the company behind LUNA which was once among the top cryptocurrencies and is now a joke or a meme coin that struggles to gain any value or attention in the market.
UST wasn't backed by actual real-world assets but was algorithmically pegged with USD while being connected with LUNA as well. As soon as it started losing its peg, the whole project, including all its coins and tokens, collapsed in no time. It was a historical and unforgettable event.

[bluebit25]

No one is saying that unbacked stablecoins don't pose risks. The lack of independent verification makes transparency a major issue. There is no way to ensure that those tokens are truly backed 1:1 by real assets unless their reserves are certified. Furthermore, the power of issuers to create more coins at will or block them suddenly creates an additional level of ambiguity. All of these features can make unbacked stablecoins unsuitable for keeping in your wallet for long periods of time. Unbacked stablecoins should be used with caution.

[Bushdark]

No one is saying that unbacked stablecoins don't pose risks. The lack of independent verification makes transparency a major issue. There is no way to ensure that those tokens are truly backed 1:1 by real assets unless their reserves are certified. Furthermore, the power of issuers to create more coins at will or block them suddenly creates an additional level of ambiguity. All of these features can make unbacked stablecoins unsuitable for keeping in your wallet for long periods of time. Unbacked stablecoins should be used with caution.

I think we have all learnt our lesson on buying anf and holding good stable coins so that we don't lose money just like the way it happens with terra. I don't have any issues with unbacked stable coins but we just have to take risk we can afford to lose. There are plenty of stable coins in the market and we need to make sure that we hold good once that will not suddenly lose value and holders would end up losing their funds. Holding is a risk and we need to understand that so that one don't have to come and complain later for severe loses.

[beerlover]

Unbacked stablecoins should be illegal. Because why should it be allowed to provide such a crap and have no insurance?
Every distributir of stablecoins should prove a backing of such stablecoins.
I fit is a 1-Dollar stablecoin, it needs tob e backed by 1 dollar.
If it‘ not backed, it should not be allowed tob e traded because it is huge risk for boyers in case it is getting hacked or collapsing.


For our coins to be safe, we need to avoid unbacked stable coins because of risk.

This illegal part is a little bit of a question mark because how are you going to make something illegal that has no central figure? I mean you can't make the "team" of it stop it, after all there is a reason why it's called decentralized and if it's decentralized that means they have no power over it at all, and that's the most important part of it. I believe that we need to consider the situation to be a little risky for governments to make it illegal in the end.

We should consider the situation to be a lot worse, like make it in a way that it will take some time for people to realize what's right and what's wrong. They can make it in a way where using it is illegal, but it's crypto so it would be hard for it to be illegal, you would need to catch every single person, that's difficult.

[Beparanf]

I think we have all learnt our lesson on buying anf and holding good stable coins so that we don't lose money just like the way it happens with terra. I don't have any issues with unbacked stable coins but we just have to take risk we can afford to lose. There are plenty of stable coins in the market and we need to make sure that we hold good once that will not suddenly lose value and holders would end up losing their funds. Holding is a risk and we need to understand that so that one don't have to come and complain later for severe loses.

But what stablecoins announced that they unbacked? Even the most shady Tether that failed to provide timely audit about their reserve is still the most popular stablecoin because users can’t demand them to become 100% transparent all the time.

Even the scam UST is backed by their own token Terra which is the reason why it collapsed because the founder didn’t use the reserve funds that was supposed to be as reserve. This is the problem on stablecoin on crypto, anyone can hide the audit for their reserves without any responsibility to become transparent because we are only in trust basis with this crypto companies.

[Mate2237]

Really people are afraid of bitcoin volatility because they don't know if they will make profit when they want to withdraw it. But even at that I still prefer bitcoin because it gives joy if you are hodling for long term. Many people still not believe that bitcoin will hit $120k in the all time high after the halving of this month. How can one even think of  investing in stable coins when you know that nothing will enter. Is there any different between stable coins and fiat currency? They look alike. If one one invest in stable coins, he will still withdraw that the same amount again.

But stable coins are still better then unbacked or unrecognized projects in the ecosystem. Those are projects that have not been recognized by any community. And it is not good to invest in them.

[batang_bitcoin]

You're right, avoiding and not supporting them is what we can do. I've seen those stable coins that are no longer stable and their value have dropped a lot. So, kind of avoid those for your own safety and if you're taking profits and keeping them in stable coins, don't be too reliant on much with them but always choose what you think is right for you. Because keeping wealth and profit in crypto is a serious thing, one won't sell his bitcoin as that's his way of keeping wealth in profit so, if there are other things aside from using stablecoins for keeping your own money, wealth or profit, do it but not with this.

[Hispo]

I must admit, before the Terra-Luna fiasco I personally thought there was some use case or future for algorithmic stablecoins within this market, but I guess they pose more a risk than an advance for this ecosystem and a solution for the demand of stable cryptographic assets within Blockchains.

Though, I am neither very fond of those stablecoins which are backed by Fiat of Fiat equivalents in centralized bank accounts, like USDT. The best solution in my opinion is to go for the over-collaterized stablecoins like DAI, even if their liquidity is not so big as Tether or USDCoin.

It was very ironic when the debacle of Terra-Luna took place, since back then I learnt much of the DAI in circulation was indirectly backed by Terra-Luna, and even DAI suffered a small depeg.

[Abiky]

The definition of stablecoin is, that USD or any other fiat backs it.

This is free market, everyone can launch their own project whether it'd value depends on its demand and supply or like USDT, its value is pegged to USD but we never know the creator actually has reserves for the printed tokens or if they just do it out of thin air that's why it's not suitable for holding and people mainly uses it for trading.

The real problem are algorithmic stablecoins. They're not backed by anything. You can lose it all in an instant if they fail to hold the peg against the USD. This is what happened with Terra/LUNA's UST stablecoin.

USD-backed stablecoins are a much safer bet. But there's also the risk of losing it all if the stablecoin issuer fails to match the supply with its USD reserves. USDT is one of those stablecoins with a shady history. Who says it won't lose its peg in the future? For what I know, nothing lasts forever. I'd suggest you diversify your investment to minimize risks as much as possible. You'll thank me later.

[GeorgeJohn]

I will say that the major reasons why people invest in Bitcoin more than altcoins is because of Bitcoin is more valuable and is more reputable than them, so when you come in terms of comparison between bitcoin and the stable coins you can see that bitcoin do appreciate in value and the altcoin sometimes does not appreciate in value like Bitcoin so that is why many people ventured into bitcoin investment more than unstable coins

The definition of stablecoin is, that USD or any other fiat backs it.

This is free market, everyone can launch their own project whether it'd value depends on its demand and supply or like USDT, its value is pegged to USD but we never know the creator actually has reserves for the printed tokens or if they just do it out of thin air that's why it's not suitable for holding and people mainly uses it for trading.

you are right but the thing is that sometimes those coins or those tokens we think that is not going to be valuable later after people have know them and they gathered influence they can be valuable, most of the tokens today that is valuable in the market started one day and today they are recognised, even bitcoin it happens to bitcoin also because when it started many people who is around knows bitcoin today did not values it when it starts.

Stablecoins as the name express is greatly known for its suppression to fluctuation and volatility that other cryptocurrencies like bitcoin is known for. And it's as a result of the nature of their stability  that traders hold their asset in stable to retain it's value within the short time before use for trade. Hence the stability, a lot of persons have made losses leaving their money in a stablecoin project that was built on a scam exit plan.

that is why it is advisable to make a necessary research in any of the altcoin project that you want to invest on because so many of the altcoins is not a project that you can invest on without a proper research...if you don't want to be scam in new launched project make sure you check the method of the awareness, its the awareness that will determine if the project is real or not, many people who invest in such projects do make research properly before they invest on it.

Unbacked stablecoins should be illegal

Well, that would require government regulation, and all the crypto enthusiast think that it's the root of all evil and the government shouldn't be trying to protect them from scams. A lot of things in crypto should be illegal but aren't because regulators don't want to tire themselves with the hard work of enforcing bans. For example, creating a token with a promise that it will work and have some features, and later failing to deliver that due to lack of trying is essentially a scam, yet it has never been classified as such so scammers can completely legally do that.

that is why I have been emphasizing on research because if you make a proper research in any of the token Project that you want to invest on that will be enable you to know if the project is a scam or not a scam because through that you know their objective of existence, I don't think anybody is ready to figure out a project that is a scam or a project that is not a scam so provided that cryptocurrency is involved they may be existence of a scam project token.

[jrrsparkles]

The definition of stablecoin is, that USD or any other fiat backs it.

This is free market, everyone can launch their own project whether it'd value depends on its demand and supply or like USDT, its value is pegged to USD but we never know the creator actually has reserves for the printed tokens or if they just do it out of thin air that's why it's not suitable for holding and people mainly uses it for trading.

The real problem are algorithmic stablecoins. They're not backed by anything. You can lose it all in an instant if they fail to hold the peg against the USD. This is what happened with Terra/LUNA's UST stablecoin.

USD-backed stablecoins are a much safer bet. But there's also the risk of losing it all if the stablecoin issuer fails to match the supply with its USD reserves. USDT is one of those stablecoins with a shady history. Who says it won't lose its peg in the future? For what I know, nothing lasts forever. I'd suggest you diversify your investment to minimize risks as much as possible. You'll thank me later.

Absolutely, any stable coin that is centralized can lost its value at any time and I only knew one stable coin which is DAI backed by smart contracts of ethereum but as we know people prefer the tokens with liquidity so they just go with USDT even if there is risk of losing their money.