Aren't you afraid to store your bitcoins in stablecoins?

[KiaKia]

You really can't store Bitcoin in stablecoin, can someone tell me how this is possible? You need to sell Bitcoin for stable coin and move the stable coin out of an exchange, would be manageable if you said storing Fiat in stable coin but not Bitcoin..

I have been storing stablecoin for future investments since many years now and I I have never doubted that something bad can happen, I am fully aware of the hate on USDT to be precise, they have been investigated too many times.

If something is already up by now there shouldn't be anything called usdt again,  relax yourself, Tether company is already working on a Decentralised platform too, I believe they will be around for a while even though they are fully centralised.

[qurbanshah02]

I am guessing that it’s just pretty much the same for others whether or not they store it in stablecoins or fiat. Both will be unsafe especially with how the world is moving these days. Those who store it in stablecoins most likely are still planning on buying some bitcoin later on and they hold stablecoins for convenience.

If I have such an opportunity, I will keep it as a Stablecoin because even if its price decreases, it will increase at some point and I can also put it in Bitcoin, which is beneficial for me. If I convert it to Fiat, I will get the full amount but it will not benefit me nor will I have any coin with which I can increase my investment. Although both ways are clear, I would consider choosing Stablecoin better because it is more beneficial. Although one wants to take and use Fiat, it is also better, but I will use it for some other reason and for future investment. Those who think about Bitcoin later are better, so I will also think about using Bitcoin later. This is the better way and many people choose Fiat because of their low money, which is better to some extent. Although Stablecoin decreases for some time, but later as the price of Bitcoin increases, we will benefit.

[HONDACD125]

Terra USD was backed by LUNA, which was backed by nothing. They did have a reserve of Bitcoin to try and protect the peg, but its total value was much smaller than the amount of UST in circulation. Tether’s USDT is presumably fully backed and isn’t some untested experimental ponzi. There are definitely still risks with USDT, but there isn’t the same level of worry that it might suddenly collapse.

If USDT were to depeg, that would create an arbitrage opportunity where people can buy it for less than $1 and then redeem it for its full value. Eventually, this arbitrage should bring it back to $1. The fact that it hasn’t collapsed or depegged for a prolonged period gives people confidence that it actually has full backing.

People actually tried to do the same thing with UST that you have suggested people should do with USDT if it depegs. When UST started to depeg and lost some value, some people thought it's a great opportunity to make some money because it is a stable coin and it will definitely get back to its original value very soon, but they were wrong, and the coin kept losing value and this along with investors of LUNA lost millions of dollars in that project crash, and it is probably one of the most tragic crashes of the history of this market, if I'm not wrong.

I totally agree with OP on this subject, because even if we are told that all the coins in circulation are backed by actual USD, but we can't really know unless there is transparency, and for that, audits are required, and those audits should be done by firms or companies that are trusted and has good reputation. And even if the stablecoins are backed by real USD, that still doesn't change the fact that they are completely centralized, and the company can actually freeze any of the coins at any time whenever they want to, which doesn't make it risk-free at all.

[davis196]

Aren't you afraid of keeping your assets in USDT (a centralized financial services like a bank) for the entire bitcoin bearish period, which, as usual, lasts several years, meaning quite a long time, for the subsequent purchase of bitcoin. Stablecoins is fundamentally no different from a bank, but in this case, "depositors" are less protected (at least in banks, deposits are insured and will be compensated by the state in case of force majeure, in theory)? Stablecoins could collapse, go bankrupt, i.e....anything could happen.

Who the hell would keep his assets in stablecoins for several months or several years? The inflation would cause your stablecoin savings to lose value. Tether doesn't pay out interest or dividends to all USDT holders. You could ask a similar question to all the people, who keep their BTC on centralized crypto exchanges. A centralized crypto exchange can also be viewed as a bank, and nobody can guarantee your BTC, if the crypto exchange goes bankrupt or exit scams. Holding your assets in stablecoins for more than several weeks is just stupid. Stablecoins were created as a tool for the day traders, not for the investors.

[sergiorus]

i remember back in the day people would prefer to hedge short on bitmex rather than hold stablecoins.
among options it was solely USDT though, which was getting FUDed to the ground on the daily back then, so you may as well understand them.

as of today, i think holding USDT or USDC possesses risks not more than holding money in a bank.
of course it's different with other stablecoins and i don't really have the will to research just how different it is with them.

[Alpha Marine]

I understand the concern. I think about it too. I have never kept a large amount in USDT for a long time. However, you have to think about the alternatives. If a person doesn't want to keep their money in Bitcoin because they don't want to keep it long term, then the alternative is either fiat or a stablecoin. If you're somebody from the US, UK or EU, you can keep in your fiat currency, because to a degree, it is stable, but if you're like me, and from a third-world country where the currency can decline 5% within the next week, then the better and easier alternative is stablecoins.
Stablecoins are not ideal, but compared to some economies with shit currencies, it is a better evil. Plus, centralised as it may be, it is still pseudonymous. I understand the risk, but it is still better than fiat to some extent.

[Alpha Marine]

I understand the concern. I think about it too. I have never kept a large amount in USDT for a long time. However, you have to think about the alternatives. If a person doesn't want to keep their money in Bitcoin because they don't want to keep it long term, then the alternative is either fiat or a stablecoin. If you're somebody from the US, UK or EU, you can keep in your fiat currency, because to a degree, it is stable, but if you're like me, and from a third-world country where the currency can decline 5% within the next week, then the better and easier alternative is stablecoins.
Stablecoins are not ideal, but compared to some economies with shit currencies, it is a better evil. Plus, centralised as it may be, it is still pseudonymous. I understand the risk, but it is still better than fiat to some extent.

[Die_empty]

Who the hell would keep his assets in stablecoins for several months or several years? The inflation would cause your stablecoin savings to lose value. Tether doesn't pay out interest or dividends to all USDT holders. You could ask a similar question to all the people, who keep their BTC on centralized crypto exchanges. A centralized crypto exchange can also be viewed as a bank, and nobody can guarantee your BTC, if the crypto exchange goes bankrupt or exit scams. Holding your assets in stablecoins for more than several weeks is just stupid. Stablecoins were created as a tool for the day traders, not for the investors.

They assume it is a smart move to avoid taxes and government control. But they fail to understand that they are taking greater risks. These centralized organisations could be sanctioned by the government and their accounts could be frozen. It might be safer to keep money in fiat since it is insured by some government institutions. I prefer to keep my money in Bitcoin regardless of the drop in price faced during the bear market. I am sure that the price will beat its ATH, so I don’t need to keep stablecoins..

[sergiorus]

Who the hell would keep his assets in stablecoins for several months or several years? The inflation would cause your stablecoin savings to lose value. Tether doesn't pay out interest or dividends to all USDT holders. You could ask a similar question to all the people, who keep their BTC on centralized crypto exchanges. A centralized crypto exchange can also be viewed as a bank, and nobody can guarantee your BTC, if the crypto exchange goes bankrupt or exit scams. Holding your assets in stablecoins for more than several weeks is just stupid. Stablecoins were created as a tool for the day traders, not for the investors.

They assume it is a smart move to avoid taxes and government control. But they fail to understand that they are taking greater risks. These centralized organisations could be sanctioned by the government and their accounts could be frozen. It might be safer to keep money in fiat since it is insured by some government institutions. I prefer to keep my money in Bitcoin regardless of the drop in price faced during the bear market. I am sure that the price will beat its ATH, so I don’t need to keep stablecoins..

nobody would sanction Tether or Circle, they are systematically important entities and are insured the same way as big banks.
storing fiat anywhere outside the biggest banks possesses more risk.

[SilverCryptoBullet]

I trust Circle and Tether because they have a very simple and profitable business model they issue tokens in exchange for dollars, and then earn interest on U.S. Treasury bonds. That is exactly why they have no real incentive to deceive users.

The dollar itself, as a fiat currency, is far riskier, because inflation can easily spiral out of control and turn into hyperinflation. At that point, prices no longer rise gradually from year to year, but from day to day, and in the end people no longer want dollars in trade, but instead seek gold, Bitcoin, or any other real good.

Between the US dollar (fiat currency) and Tether USD (USDT), I am countering back your opinion, as US dollar is safer than USDT. About risk, USDT has more risk than US. dollar as if anything bad happens, the USA government will prioritize defending their national fiat currency, that is US dollar. Tether USD is like all other stable coins, won't be the first priority of the USA government.

Stablecoins are more convenient than fiat currencies but they are far riskier and it will be always true. Fiat currencies are backed by governments while stablecoins are not.

[Lucius]

I personally would never do that because I know the risks it entails, but I'm not surprised that so many people do exactly that because it's much easier for them than selling BTC for fiat and having their bank have access to such transactions.

Most so-called stablecoins can be frozen no matter where you store them because they do not recognize non-custodial storage in the sense of "not your keys, not your coins". Ultimately, everyone is responsible for their own actions, and if something bad happens, they have no right to blame anyone but themselves.

[tbct_mt2]

I personally would never do that because I know the risks it entails, but I'm not surprised that so many people do exactly that because it's much easier for them than selling BTC for fiat and having their bank have access to such transactions.

With more and more regulations on cryptocurrency and stablecoins, in the future stablecoins will lose such advantage against fiat currencies and bank accounts. At such time in the future, I hope that people will have more reasons to use fiat currencies, CBDCs than stablecoins but it is with a big conditions, that with stablecoins there will be privacy or anonymity like it can provide in the past until now.

Most so-called stablecoins can be frozen no matter where you store them because they do not recognize non-custodial storage in the sense of "not your keys, not your coins". Ultimately, everyone is responsible for their own actions, and if something bad happens, they have no right to blame anyone but themselves.

Most Stablecoins Can Be Frozen, Even in Your Own Wallets. You did a very strong warning by emphasizing that the risk exists with stablecoins in non-custodial wallets which in theory should be "it's people's private keys, it's people's stablecoins" but it's no longer true with centralized stablecoins and they can use smart contract to freeze people's stablecoin funds anytime.

[Ishicryptic]

I understand the concern. I think about it too. I have never kept a large amount in USDT for a long time. However, you have to think about the alternatives. If a person doesn't want to keep their money in Bitcoin because they don't want to keep it long term, then the alternative is either fiat or a stablecoin. If you're somebody from the US, UK or EU, you can keep in your fiat currency, because to a degree, it is stable, but if you're like me, and from a third-world country where the currency can decline 5% within the next week, then the better and easier alternative is stablecoins.
Stablecoins are not ideal, but compared to some economies with shit currencies, it is a better evil. Plus, centralised as it may be, it is still pseudonymous. I understand the risk, but it is still better than fiat to some extent.

Stablecoins like USDT are like child of necessity to some of us when we have a need to swap our Bitcoin into another currency for various reasons, it stands out as a better alternative compared to our other options. For people like us who are from countries that our local currencies can be devalued at any point in time we can take advantage of a stablecoin to sustain the value of our money unlike people from the US and Europe with stable currencies. I think that if you must swap your Bitcoin to a stablecoin you should atleast look for the one with lesser risks like USDT, I'm not vouching for it but atleast it is relatively safe to hold your money so it doesn't devalue.

[YOSHIE]

In my opinion, storing assets in stablecoins is like "walking on very thin ice" - you never know when will fall through the ice.

You must be anticipating that the current situation globally is causing panic among crypto users/investors in general, especially those who invest their Bitcoin assets in stablecoins/USDT, For this reason, I see that some of my local investor friends are anticipating things that don't anticipate the possibility of stablecoins having problems.

They have changed Bitcoin to their local currency, there are also those who have changed Bitcoin to Ethereum, BNB and so on, the point is that they are no longer in the stablecoin/USDT position, so if at any time the stablecoin/USDT has problems they are still safe.

[Cookdata]

Who the hell would keep his assets in stablecoins for several months or several years? The inflation would cause your stablecoin savings to lose value. Tether doesn't pay out interest or dividends to all USDT holders. You could ask a similar question to all the people, who keep their BTC on centralized crypto exchanges. A centralized crypto exchange can also be viewed as a bank, and nobody can guarantee your BTC, if the crypto exchange goes bankrupt or exit scams. Holding your assets in stablecoins for more than several weeks is just stupid. Stablecoins were created as a tool for the day traders, not for the investors.

Well I don't have the figures but I can tell you that in every 10 crypto investor that hold Bitcoin, 5 of them deals with the stable coin, 3 might be pro Bitcoin while the rest of the 2 will between stable and Bitcoin, just because you don't do it doesn't mean the rest of the crypto enthusiasts doesn't do it, the crypto industry is broken by what we see around and consume but I blame it on exchanges that made it possible by pushing his centralized stable coins on customers.

Check stable.rip, that's the total number of stablecoins that has been seized, last I check this figures were upto $3.2B and many more are getting seize each minutes, hours and daily but people don't care or could it be that many are not inform, I can't say. As we are getting more adoption of Bitcoin so we are getting more gullible people that doesn't know about the risk associated with stablecoins, we have much to spread so people can learn.

[Powerjumboo]

I never hold USDT because USDT cannot bring profit for me because it is a stable coin. There are many who have sold Bitcoin at $100,000 or above $100,000 or even below $100,000 and kept USDT but I have never done such a thing because I have not held my Bitcoin for this short period of time I have held my Bitcoin for a long time. Since I have held my Bitcoin for a long time, I will never sell it during a downturn. Currently, the price is going down, I am following other ways to increase my Bitcoin investment like I am investing some of my outside income in Bitcoin and I am also trying to invest continuously. Since I joined crypto, I have accepted all the risks and if I lose in any way, I will definitely accept it.

[Agbamoni]

Good reminder. I am afraid of holding USDT, as im yet to get over the Terra LUNA experince. This is why if im not holding my Bitcoin, I am holding the value in FIAT until I think it's time to buy my Bitcoin back. However, holding FIAT also has disadvantages if the local currency keeps losing value. That brings us back to how long we plan to hold our Bitcoin. If the duration is above 10 years, then there is no need to sell the Bitcoin. I'll leave my Bitcoin in my wallet.

[vanesha]

I don't think too much about stablecoins. Essentially, all coins are trustworthy, but not all assets. In my opinion, they must have anticipated the worst-case scenario if stablecoins collapse, but we never know what the whales' plans are. They may already have enough money to support themselves and are well aware of the shortcomings of cryptocurrency itself. This is a risky asset. Entering means agreeing. I think what happened to LUNA recently has caused a lot of FOMO, and how many were desperate and disappointed at that time.

[bangjoe]

Snip
P.S. Tether (USDT) plans to conduct an audit (it's been promising to do so for the past five years) and will hire KPMG to audit the financial statements and PwC to review the company's internal quality control systems. What if the audit reveals "curious" nuances that could bring down this stablecoin? As a reminder, Tether has never conducted an audit in its entire existence, and it's unclear what's going on behind the scenes.

Thank you for reminding me sir, I have previously sold some of my bitcoins and kept them in USDT stablecoin until now, and it seems that the concern is indeed necessary to do, previously I divided it with 3 stable coins to keep unpleasant things like that, but the dominant in USDT seems like I have to move it again to another stable coin again so that the risk is also reduced, I need a stable coin in the re-accumulation stage at a falling price like now, I can't directly convert it directly to bitcoin because I'm doing DCA, so what I did by dividing it into several stable coins should be right to anticipate that fear.

[Cryptomultiplier]

Snip
P.S. Tether (USDT) plans to conduct an audit (it's been promising to do so for the past five years) and will hire KPMG to audit the financial statements and PwC to review the company's internal quality control systems. What if the audit reveals "curious" nuances that could bring down this stablecoin? As a reminder, Tether has never conducted an audit in its entire existence, and it's unclear what's going on behind the scenes.

Thank you for reminding me sir, I have previously sold some of my bitcoins and kept them in USDT stablecoin until now, and it seems that the concern is indeed necessary to do, previously I divided it with 3 stable coins to keep unpleasant things like that, but the dominant in USDT seems like I have to move it again to another stable coin again so that the risk is also reduced, I need a stable coin in the re-accumulation stage at a falling price like now, I can't directly convert it directly to bitcoin because I'm doing DCA, so what I did by dividing it into several stable coins should be right to anticipate that fear.

Am just curious to know the wallet you use in saving all three different stable coins, because what I fear more than converting Bitcoin to USDT, is to save or hold them in a wallet that can also be affected by different things.

For now though, I try to have a little BTC and convert all remaining stablecoins to my local fiat currency because just as OP said, it would be better to be compensated or at least be able to rush to save my account from a major bank crisis, rather than wait on a stablecoin without a physical office to be available after undergoing auditing by KPMG because anything can happen.