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

[Localhostspeed]

I think the highest risk we bare having them is the risk of them getting removed from the centralised exchange where it is traded or when they disconnect it from the original fiat, infact it's just using fiat digitally and that is even one thing we shouldn't try if we loved the idea of crypto. right now it seems that we are getting a lot of them more in use than it's even imagined. The fact that you can just get nuked out of your funds if they think it's bad money is one big risk we have made normal, their are evidence of them in the web and I believe that should be a lesson though.

The both risks you mentioned are not risk IMO, if a stable coin is global uou can sell or swap it on other exchanges without any problem. The biggest concern is the seized of coins, there are many companies and countries that are victim of Tether, they have seized many stable coins of people because of nepotism and favoritism in the government, it's too centralized that they can rendered a wallet address with a coin useless that's why I don't like many of them.

The popular and better one which is DAI is better stable coin of all and you can sell it for another coin especially ethereum on any decentralize exchanges, you don't have to visit any of those exchanges to be able to sell them and you don't have to worry that one company that deploy a contract can seize your coin, it is not possible unless they want ethereum DAO to die completely.

[Johnlomape]

I think the highest risk we bare having them is the risk of them getting removed from the centralised exchange where it is traded or when they disconnect it from the original fiat, infact it's just using fiat digitally and that is even one thing we shouldn't try if we loved the idea of crypto. right now it seems that we are getting a lot of them more in use than it's even imagined. The fact that you can just get nuked out of your funds if they think it's bad money is one big risk we have made normal, their are evidence of them in the web and I believe that should be a lesson though.

Most of the stable coins if not all are pegged to USD and the United States can suit a project for not getting a license before they could peg their stable coins to the United States dollar. This is why some few stable coins projects are dead now because they are not licensed by the SEC which regulate cryptocurrency. The stable coins projects that are still operating without a license from the government have not been noticed by the the government and it will be very hard for them to be listed on exchanges.

[dansus021]

~SNIP~

Typical of centralized stablecoins. Nothing new here. This is what banks do when they suspect fraud and/or other illegal activities. Except that banks are much safer than stablecoins because they strictly adhere to financial regulations. They're under tighter scrutiny by the government. It's why stablecoins have been unable to replace Fiat. At least, not yet.

If you want to minimize the risk of loss, simply diversify between stablecoins and Fiat. Use stablecoins whenever you want to quickly protect yourself against market volatility, while keeping the rest of your money in Fiat. With how popular stablecoins are becoming each day, we might reach a point where they will "beat" Fiat for good. In other words, Fiat will no longer exist as stablecoins take over the world (supported by governments worldwide). Only time will tell...

AGREE from point of view the bank today is much safer because they have ton of checklist before freeze any account and bunch of regulator.

I have strong believe that stablecoin get approved from the United States because this "freeze" mechanism so the US gov can still have control on their USD Fiat. But like it or not stablecoin got so big because people love it and this become a new norm in crypto industry.

Yes diversify is needed and hey there are a ton of stablecoin today USDT, USDC, FDUSD, USDD, DAI and other people/company basically want the piece of stablecoin market today and is the most profitable business.

[RagnarTheThunderer]

I think the highest risk we bare having them is the risk of them getting removed from the centralised exchange where it is traded or when they disconnect it from the original fiat, infact it's just using fiat digitally and that is even one thing we shouldn't try if we loved the idea of crypto. right now it seems that we are getting a lot of them more in use than it's even imagined. The fact that you can just get nuked out of your funds if they think it's bad money is one big risk we have made normal, their are evidence of them in the web and I believe that should be a lesson though.

That's why I think stablecoins are useful, but only when people clearly understand what kind of risk comes with them. Many users treat them like cash because the price stays close to fiat, but in reality you still depend on the company behind the token, the reserves they hold, and the platforms where you use it. If any of those parts fail, the stable value can quickly become a problem.

A lot of people only notice this during market stress, when withdrawals slows down or question about backing start appearing. So stablecoins are practical for transfers and short-term holding, but I personally wont treat them the same way as holding coins where you fully control the keys.