How Safe Are Stablecoins? Let's Talk Risk and Trust

[bitgolden]

Are they safe enough to transfer money? Yes they are. Are they safe enough that I would keep my money in stablecoins for a year? They are not. For just moving money around they are very good for me, because I have them for like 15 minutes max and I doubt anything will happen during that 15 minutes, it may, but it's a rare chance. Whereas if I keep them for a year, anything bad could happen, this is a world even dictators are picked from their beds, companies are not safe from governmental outreach.

[uneng]

Are they safe enough to transfer money? Yes they are. Are they safe enough that I would keep my money in stablecoins for a year? They are not. For just moving money around they are very good for me, because I have them for like 15 minutes max and I doubt anything will happen during that 15 minutes, it may, but it's a rare chance. Whereas if I keep them for a year, anything bad could happen, this is a world even dictators are picked from their beds, companies are not safe from governmental outreach.

I agree with you. Stablecoins are quite convenient and a big plus compared to the early days of internet we needed paypal to transact online from country to country. Stablecoins are a great addition to crypto industry, but unfortunatelly, they aren't safe for long term holdings. We are never assured the people behind them have a solid or even a real collateral to cover the amount of money in circulation through their stablecoins.

Let's consider a hypothetical scenario where 90% of stablecoin holders started mass selling their coins suddenly. How would the ratio 1:1 to dollar currency would be maintained?

It's not an exclusivity of stablecoins, though. We have to keep in mind even banks would bankrupt on that scenario, what means they aren't safe for long term holdings too, unless there is a Credit Guarantee Fund involved.

[wozzek23]

Stablecoins are quite convenient and a big plus compared to the early days of internet we needed paypal to transact online from country to country. Stablecoins are a great addition to crypto industry, but unfortunatelly, they aren't safe for long term holdings. We are never assured the people behind them have a solid or even a real collateral to cover the amount of money in circulation through their stablecoins.

Let's consider a hypothetical scenario where 90% of stablecoin holders started mass selling their coins suddenly. How would the ratio 1:1 to dollar currency would be maintained?

It's not an exclusivity of stablecoins, though. We have to keep in mind even banks would bankrupt on that scenario, what means they aren't safe for long term holdings too, unless there is a Credit Guarantee Fund involved.

Believe me, we are in an echo chamber here and that is why we think that it is used a lot, but the reality is that it is not used as much as you think it is. I have worked in other industries before I came here and I can tell you that, even today, there are people who prefer paypal, and do not touch crypto in anyway, not even stablecoins. This is why it's quite clear that we still have a long way to go, hopefully things will get better but for now time being it is not that easy.

[jostorres]

Believe me, we are in an echo chamber here and that is why we think that it is used a lot, but the reality is that it is not used as much as you think it is. I have worked in other industries before I came here and I can tell you that, even today, there are people who prefer paypal, and do not touch crypto in anyway, not even stablecoins. This is why it's quite clear that we still have a long way to go, hopefully things will get better but for now time being it is not that easy.

Used is a very different word. What do we mean by used? Are we thinking about used in the sense that we are using it outside in the "real" world? If so, then yeah there aren't that many places that accept bitcoin, stablecoins, or alts at all, very few places.

But, if we are talking about online? Like as a payment processor type of way where we pay people for it? Then even just in the crypto world alone, within our industry, so many people keep paying and getting paid with crypto and that is how it is used.

[TastyChillySauce00]

Are they safe enough to transfer money? Yes they are. Are they safe enough that I would keep my money in stablecoins for a year? They are not. For just moving money around they are very good for me, because I have them for like 15 minutes max and I doubt anything will happen during that 15 minutes, it may, but it's a rare chance. Whereas if I keep them for a year, anything bad could happen, this is a world even dictators are picked from their beds, companies are not safe from governmental outreach.

Year long holding is safe if we care enough to keep monitoring their audit and reserve.
Currentý i'm diversifying some of my stablecoin to USDS and I keep monitoring their reserves. If collateral to back up isn't over collateralized by good enough margin. I'd instantly convert it back to USDC or USDT.

That's how people should act when they hold stablecoin. Always read their audit report, always on the lookout for potential black swan.

[Jobbe]

Stable coins aren't really that safe, and they can't make your money safer. Yes,stable coins can promise a stable value, but looking at it the other way, it's just a promise..what if they fail? For instance, you can give the company money, ($1). In return, you're given one digital coin.
They give you their word to keep your $1 safe and in a bank. And anytime you need it back,you can trade your coin for it...but look at it this Way. What if it's all a lie? maybe they don't even have that much money on them..or maybe the bank where your money was deposited in fails. So the risk are just too numerous. They are actually backed up by nothing but alogrithms and a promise to always keep it at $1 (via demand and supply).

[fuguebtc]

Are they safe enough to transfer money? Yes they are. Are they safe enough that I would keep my money in stablecoins for a year? They are not. For just moving money around they are very good for me, because I have them for like 15 minutes max and I doubt anything will happen during that 15 minutes, it may, but it's a rare chance. Whereas if I keep them for a year, anything bad could happen, this is a world even dictators are picked from their beds, companies are not safe from governmental outreach.

Year long holding is safe if we care enough to keep monitoring their audit and reserve.
Currentý i'm diversifying some of my stablecoin to USDS and I keep monitoring their reserves. If collateral to back up isn't over collateralized by good enough margin. I'd instantly convert it back to USDC or USDT.

That's how people should act when they hold stablecoin. Always read their audit report, always on the lookout for potential black swan.

To be fair, holding major stablecoins like USDT or USDC for a year or more is quite safe. They carry risk, but not as much as shitcoin, so we do not need to make everything overly complicated and more serious than necessary. USDT has been around for over a decade, it is nothing new.

However, caution is still necessary, and we should limit holding them for long period of time. Even if we tracked their audited and reserves on a daily/weekly basis, it wouldn't be of much help to us. Because once they are really in trouble, things will happen very quickly and we will not have enough time to react.