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It’s not really any less of a dollar than any other dollar is. All of our digital dollars are just bank liabilities. Circle and Tether are just banks with dolla

It’s not really any less of a dollar than any other dollar is. All of our digital dollars are just bank liabilities. Circle and Tether are just banks with dollar liabilities. Their liabilities can be transferred on crypto networks rather than traditional bank wires.

rglullis 4y ago
> Circle and Tether are just banks with dollar liabilities. But no regulatory oversight, and no chance for the common folk to prosecute or get their money back if they default. I am one of the resident crypto apologists here on HN, but there is no way that we should even try to accept what the big exchanges are doing. The whole point of crypto is to have systems that do not depend on "too big to fail" institutions, why are we suddenly trying to find excuses for their BS?
- jacobsimon 4y ago
  Not trying to make excuses for any of these companies. I'm just saying, in the abstract, there are lots of reasons why an end user would want a stablecoin besides "avoiding regulations". Even if it weren't pegged to a national currency, there is value in having a digital currency that limits its volatility. Pegging to another currency is a shortcut for doing that w/o needing decentralized monetary policy.
  - coliveira 4y ago
    Basically these people are trying to get the benefit of digital currencies without the downside of volatility. Somebody else will have to take the volatility risk. This is easy to do when the crypto currencies are going up in value, and almost impossible to do on the downside.
    - jacobsimon 4y ago
      Maybe but not necessarily. I can log in to Coinbase and buy USDC with dollars in my bank account, use the USDC in a variety of decentralized applications or contracts, and then exchange my USDC for USD again via Coinbase. It’s similar to going to the bank and withdrawing cash, and it has no inherent volatility or downside risk.
    - zeven7 4y ago
      > almost impossible to do on the downside And yet most stable coins have maintained their peg for years now, despite many of them having gone through 2 large bear markets. If 80%-90% down and still pegged doesn't disprove "impossible to do on the downside" I don't know what could. Clarification: I do think Tether is not fully backed and is likely to depeg some day, but the assertion that it's "impossible to do on the downside" is clearly not true even for Tether. And it's very clearly not impossible to keep a peg if the peg is fully backed, which may be the case for some coins (without naming specifics). DAI, backed by verifiable collateral, has also done extremely well through 2 bear markets.
      - Animats 4y ago
        > I do think Tether is not fully backed and is likely to depeg some day. Which is a good reason to get out. Stablecoins have only two stable points, 1 and 0. When they crash, they go all the way. Look at what happened with the stablecoins that already crashed.
        landemva 4y ago
        1 or 0 is true of government currencies. The unknown is when. For the Bretton Woods USD 'when' was August 15 1971. https://history.state.gov/milestones/1969-1976/nixon-shock https://history.state.gov/milestones/1969-1976/nixon-shock
- matthewdgreen 4y ago
  Tether has no meaningful regulatory oversight. Circle has money transmitter licenses in most US states, some of which cover them as a virtual asset service provider, and require specific conditions around the way that they store customer funds: https://www.circle.com/en/legal/usdc-terms https://www.circle.com/en/legal/usdc-terms I'm not claiming this is perfect, but it's pretty different.
  - smoldesu 4y ago
    That's great, but that only eliminates 2-3 classes of fraud from their potential thousands of exploits. We put too much trust in centralized companies to manage decentralized communities, and I'd bet you dollars-to-donuts that Circle will end up complicit in some sort of scheme.
- rufusroflpunch 4y ago
  Sorry, I did not mean to insinuate anything resembling cover for these stablecoins. I do not own any and I never would. In fact, I only own Bitcoin and I don’t keep any on any exchange at all. This is the only way I would ever recommend when interacting with cryptocurrencies.
thatguy0900 4y ago
It is less of a dollar, because I can say you can exchange it for a dollar when you can not, in fact, exchange it for a dollar when you try to,because I never had enough(or any) dollars. In the real world when the bank runs out of dollars the government will give me dollars instead.
- aeternum 4y ago
  For US citizens perhaps, but if you're a Russian citizen or company, the USD in your bank account is now just a worthless database entry. Just because that weapon hasn't been pointed at some group of US citizens yet doesn't mean it can't in the future.
  - hef19898 4y ago
    Maybe, maybe not. In the meanwhile SBF and similar figures are happy to protect your money in crypto assets.
    - aeternum 4y ago
      Not your keys, not your coins. Those not willing to learn self-custody are definitely better off in USD.
- jacquesm 4y ago
  > In the real world when the bank runs out of dollars the government will give me dollars instead. Up to a point.
- rufusroflpunch 4y ago
  I think that is a fair critique, but that will be coming at some point, very likely. Either a law requiring 100% liquid reserves, or a law bringing them into the FDIC system.

rglullis 4y ago

> Circle and Tether are just banks with dollar liabilities. But no regulatory oversight, and no chance for the common folk to prosecute or get their money back if they default. I am one of the resident crypto apologists here on HN, but there is no way that we should even try to accept what the big exchanges are doing. The whole point of crypto is to have systems that do not depend on "too big to fail" institutions, why are we suddenly trying to find excuses for their BS?

jacobsimon 4y ago
Not trying to make excuses for any of these companies. I'm just saying, in the abstract, there are lots of reasons why an end user would want a stablecoin besides "avoiding regulations". Even if it weren't pegged to a national currency, there is value in having a digital currency that limits its volatility. Pegging to another currency is a shortcut for doing that w/o needing decentralized monetary policy.
- coliveira 4y ago
  Basically these people are trying to get the benefit of digital currencies without the downside of volatility. Somebody else will have to take the volatility risk. This is easy to do when the crypto currencies are going up in value, and almost impossible to do on the downside.
  - jacobsimon 4y ago
    Maybe but not necessarily. I can log in to Coinbase and buy USDC with dollars in my bank account, use the USDC in a variety of decentralized applications or contracts, and then exchange my USDC for USD again via Coinbase. It’s similar to going to the bank and withdrawing cash, and it has no inherent volatility or downside risk.
  - zeven7 4y ago
    > almost impossible to do on the downside And yet most stable coins have maintained their peg for years now, despite many of them having gone through 2 large bear markets. If 80%-90% down and still pegged doesn't disprove "impossible to do on the downside" I don't know what could. Clarification: I do think Tether is not fully backed and is likely to depeg some day, but the assertion that it's "impossible to do on the downside" is clearly not true even for Tether. And it's very clearly not impossible to keep a peg if the peg is fully backed, which may be the case for some coins (without naming specifics). DAI, backed by verifiable collateral, has also done extremely well through 2 bear markets.
    - Animats 4y ago
      > I do think Tether is not fully backed and is likely to depeg some day. Which is a good reason to get out. Stablecoins have only two stable points, 1 and 0. When they crash, they go all the way. Look at what happened with the stablecoins that already crashed.
      - landemva 4y ago
        1 or 0 is true of government currencies. The unknown is when. For the Bretton Woods USD 'when' was August 15 1971. https://history.state.gov/milestones/1969-1976/nixon-shock https://history.state.gov/milestones/1969-1976/nixon-shock
matthewdgreen 4y ago
Tether has no meaningful regulatory oversight. Circle has money transmitter licenses in most US states, some of which cover them as a virtual asset service provider, and require specific conditions around the way that they store customer funds: https://www.circle.com/en/legal/usdc-terms https://www.circle.com/en/legal/usdc-terms I'm not claiming this is perfect, but it's pretty different.
- smoldesu 4y ago
  That's great, but that only eliminates 2-3 classes of fraud from their potential thousands of exploits. We put too much trust in centralized companies to manage decentralized communities, and I'd bet you dollars-to-donuts that Circle will end up complicit in some sort of scheme.
rufusroflpunch 4y ago
Sorry, I did not mean to insinuate anything resembling cover for these stablecoins. I do not own any and I never would. In fact, I only own Bitcoin and I don’t keep any on any exchange at all. This is the only way I would ever recommend when interacting with cryptocurrencies.

thatguy0900 4y ago

It is less of a dollar, because I can say you can exchange it for a dollar when you can not, in fact, exchange it for a dollar when you try to,because I never had enough(or any) dollars. In the real world when the bank runs out of dollars the government will give me dollars instead.

aeternum 4y ago
For US citizens perhaps, but if you're a Russian citizen or company, the USD in your bank account is now just a worthless database entry. Just because that weapon hasn't been pointed at some group of US citizens yet doesn't mean it can't in the future.
- hef19898 4y ago
  Maybe, maybe not. In the meanwhile SBF and similar figures are happy to protect your money in crypto assets.
  - aeternum 4y ago
    Not your keys, not your coins. Those not willing to learn self-custody are definitely better off in USD.
jacquesm 4y ago
> In the real world when the bank runs out of dollars the government will give me dollars instead. Up to a point.
rufusroflpunch 4y ago
I think that is a fair critique, but that will be coming at some point, very likely. Either a law requiring 100% liquid reserves, or a law bringing them into the FDIC system.