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.

[N9_Ninja]

If anyone’s been in crypto long enough, they know privacy comes up again and again because blockchains are public by design. It’s not about hiding bad behavior for most people — it’s about managing what data you expose and being thoughtful about how much of your activity is easily visible. That’s why even today discussions about privacy and obfuscation tools still resurface.

[khalidxpert]

With stablecoins becoming more known especially USDT, USDC, and BUSD and have been thinking: how safe are they? 

We use them for quick transfer, avoiding volatility, and holding amounts, but most of them are centralized. that means your funds can be frozen, blocked, or even seized without warning.

Are we trading freedom for convenience?
Can we actually trust these platforms or are we just one step away from losing control?

Would love to hear your thoughts let's discuss.

there is nothing safe in crypto. I will quote example of busd how binance manuplated so i must say there is nothing 100% safe

[Akbarkoe]

With stablecoins becoming more known especially USDT, USDC, and BUSD and have been thinking: how safe are they? 

We use them for quick transfer, avoiding volatility, and holding amounts, but most of them are centralized. that means your funds can be frozen, blocked, or even seized without warning.

Are we trading freedom for convenience?
Can we actually trust these platforms or are we just one step away from losing control?

Would love to hear your thoughts let's discuss.

there is nothing safe in crypto. I will quote example of busd how binance manuplated so i must say there is nothing 100% safe

Therefore you have to diversify the stablecoins that you hold, at least those that you can trust, even if you have thoughts that everything is not safe, I always do that to this day so that it runs well, even if there is a problem, I don't lose all my money, anticipation is better than nothing, the security of the provider also depends on the situation, but you yourself also have to treat your money in stable coins so that it can be safe.

[Stablexcoin]

Therefore you have to diversify the stablecoins that you hold, at least those that you can trust, even if you have thoughts that everything is not safe, I always do that to this day so that it runs well, even if there is a problem, I don't lose all my money, anticipation is better than nothing, the security of the provider also depends on the situation, but you yourself also have to treat your money in stable coins so that it can be safe.

There is no gain from holding stablecoins for long, they are profitably stable, how you buy them is how you sell them. Diversifying into separate stablecoins is what i haven't thought about, instead look for the best stablecoin, like the USDT, better than most, at worse if something should happen against USDT, you will be aware before the fall because millions of people are holding, the crash will definitely be noticed.

[Akbarkoe]

Therefore you have to diversify the stablecoins that you hold, at least those that you can trust, even if you have thoughts that everything is not safe, I always do that to this day so that it runs well, even if there is a problem, I don't lose all my money, anticipation is better than nothing, the security of the provider also depends on the situation, but you yourself also have to treat your money in stable coins so that it can be safe.

There is no gain from holding stablecoins for long, they are profitably stable, how you buy them is how you sell them. Diversifying into separate stablecoins is what i haven't thought about, instead look for the best stablecoin, like the USDT, better than most, at worse if something should happen against USDT, you will be aware before the fall because millions of people are holding, the crash will definitely be noticed.

As stated earlier, there is no 100% guarantee for security, so you can use two or more stable coins for your own security when holding stablecoins. If I move my crypto assets, I choose 50% USDT, 30% USDC, and 20% Dai. This is just a form of security for me in holding stablecoins, especially when waiting for Bitcoin to correct and I have to wait a long time to be able to enter at the price I want. I usually take advantage of staking if only having stable coins is quite good.

[TastyChillySauce00]

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.

I actually don't really trust USDT for now, their value has tanked on USDC/USDT pair for a reason.

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.

I agree, people don't expect UST to depeg yet it depeg instantly. Though there is time to reduce the loss by selling it at lower value. It's still a danger regardless. This is why diversification is needed.
When a stablecoin depeg, you don't lose all your money.

[EarnOnVictor]

With stablecoins becoming more known especially USDT, USDC, and BUSD

The BUSD shouldn't be on this list, as it was fashioned out by Binance itself in 2023 due to regulatory orders. The token has so far been replaced by FDUSD.

and have been thinking: how safe are they?  

Are we trading freedom for convenience?
Can we actually trust these platforms or are we just one step away from losing control?

The major stablecoins are thriving mainly because they are not fully decentralised, if they were, the government would find ways to kill them. Though they mostly operate on decentralised blockchains, they are centralised. However, there are some, like DA,I which are decentralised, but people do not use them much. I guess for safety concerns.

[Dunamisx]

If you want freedom from your coin, you wouldn't choose stables in the first place.

That's true, the only time we may consider for the use of stable coin is when we try to sell and wanted to first covert to stablecoin in other to know the amount worth of the coins we are having before exchanging them, but aside this, i don't think its a good idea to have all your asset on stablecoins because anything can happen as the policies keep changing with the regulators and cant afford to have our asset stocked.

[aysha9853]

With stablecoins becoming more known especially USDT, USDC, and BUSD and have been thinking: how safe are they? 

We use them for quick transfer, avoiding volatility, and holding amounts, but most of them are centralized. that means your funds can be frozen, blocked, or even seized without warning.

Are we trading freedom for convenience?
Can we actually trust these platforms or are we just one step away from losing control?

Would love to hear your thoughts let's discuss.

It really comes down to how you use them yourself. Stablecoins are great as ''tools'' for transfers, trading or short-term parking. I wouldn't hold or store them long term.

[Kavelj22]

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).

It's not just an untrustworthy model, it's a bad model based on the blockchain giving false image of what cryptocurrencies are based on. The model is likely a copy of the actual monetary system since money printed is not backed by gold or any other asset. Stablecoins are the way to integrate between two networks but the product wasn't that successful in my opinion.

[Orpichukwu]

It really comes down to how you use them yourself. Stablecoins are great as ''tools'' for transfers, trading or short-term parking. I wouldn't hold or store them long term.

Stablecoins are not even meant for holding; they're just supposed to provide value support for trading. If there ever be a need to hold any stablecoin, it should be DIA, which at least can't be frozen like Tether, and its government agency is doing with any wallet they suspect.

[abaeze]

With stablecoins becoming more known especially USDT, USDC, and BUSD and have been thinking: how safe are they? 

We use them for quick transfer, avoiding volatility, and holding amounts, but most of them are centralized. that means your funds can be frozen, blocked, or even seized without warning.

Are we trading freedom for convenience?
Can we actually trust these platforms or are we just one step away from losing control?

Would love to hear your thoughts let's discuss.

It really comes down to how you use them yourself. Stablecoins are great as ''tools'' for transfers, trading or short-term parking. I wouldn't hold or store them long term.

Exjectly you are right, it really depends on how you use them. Stablecoins are great as a "tool" for transfers, trading or short-term parking. I don't recommend using them for long-term investment. However, if someone is using it to hedge against the depreciation of fiat currency, it can be a wise move. Many people use stablecoins just for trading, i.e. buying or selling USDC/USDT with fiat currency and using that currency to invest in Bitcoin or other crypto. However, if someone is temporarily investing in stablecoins, it is not a bad thing

[o48o]

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).

There are better arguments against stablecoins.

Because what are you comparing "digital" coins against exactly? What you described applies on basically anything. At least to all fiat currencies, as they are based on promise that they have value. It doesn't matter if you are holding stablecoins, physical coins, banknotes or digital fiat money, because it's about their issuer, which people are trusting.

"What if it's all a lie?" That's a strange one. Lie for whom? That's why audits exist. I would say that with algorithmic coins it's more about incompetence and recklessness we need to worry about more then "lies".