Topic: Are Stablecoins A Necessary Evil? (Read 809 times)

Fiat-backed, the problem is with the word "FIAT".
Cryptocurrencies were created to fight with FIAT money. FIAT is an evil that infiltrated cryptocurrencies and try to dump them all  .

They have a place in crypto. I can't say evil but they are not an investment.

They are just a way to trade.

That is false, we can compare and trade cryptocurrencies directly against fiat so stable coins do not serve that purpose as you claim, however it does not mean that stable coins are useless, they have their function since they allow you to get something similar to fiat without using banks, but as we have seen during the last week they have the same weakness as fiat in which you need to trust a third party to hold the parity between the coin and fiat, and that is a huge weak link that cryptocurrencies were supposedly trying to solve.

The best decentralized approach would be what BitBay.Market is trying to achieve.

As far as I know 99.99% of stablecoin projects think they have to be hard-pegged to a currency or commodity.
They don't. And this is their biggest weakness.

If anyone trades forex, they will know that the dollar value is not hard pegged. Its value is dynamic. The only difference is that it exchanges within a low volatility market. This low volatility is to a point where people are willing to accept it as a medium of exchange. A 5 dollar burger is still a 5 dollar burger at a restaurant, even if on a bad day in forex, the dollar possibly loses over 1/2% in value against gold or the Euro, etc.

Therefore the most robust stablecoin is one that tries to establish itself as a decentralized cryptocurrency that's value is independently determined. Bitcoin can already do this except it most likely has years even possibly decades  before it will ever become stabilized enough to be considered a medium of exchange.
So the only real step bitcoin is missing is a way to stabilize it's price. Paul Donovan, chief global economist of UBS, said it best back in an interview published in Nov. 2018, "Every economist knows a store of value is about balancing supply and demand, and with cryptocurrencies you cannot control the supply in response to a drop in demand."

And he nailed it on the head! While he was trying to be a smart ass about the future of crypto and why he thinks it will fail, he also provided the solution to fix the rampant volatility in the industry.
This is programmable money, never underestimate what can be hard coded into a blockchain - never say never.

BitBay.Market will be the first cryptocurrency that will solve this. Rather than complicate itself with hard pegging itself like 99.99% of others are doing. BitBay is simply applying a decentralized peg protocol that will allow coin holders to vote to freeze or unfreeze the total coin supply. Each coin has a memory, and can either be a liquid coin or a reserve coin depending on the voters consensus. This way it doesn't have to print new coins or burn existing coins. It simply takes the majority consensus and freezes or unfreezes the liquid supply so that it can "balance with dynamic demand". BitBay will prove Paul Donovan wrong.
This means price is not hard pegged. It can reach new values and hold these values. And why not? Pegging a stablecoin to the dollar, which has been steadily losing value since God knows how long, doesn't make any sense. If anything, decentralized cryptocurrencies that have a limited supply with or without regulated inflation should always be able to gain in value against fiat as long as demand growth is constant.

Will the price be volatile? In the beginning most likely, yes, it will. But over time, the ability to balance supply with demand should keep trade ranges contained with a minimal amount of volatility.

How is this possible? Bitcoin can take anywhere from 1-2 years for a bear market to end. With BitBay, voters can freeze roughly 80% of the total liquid supply in just 8 days! It would be hard pressed for a bear trend to last longer than 8-12 days at most. Some traders wouldn't even call that a trend, just a hiccup!

When investors can fight back against speculators, they have much more incentive to want to invest and stake which pushes out the volatility speculators so love.

There are many goals for this decentralized peg as I've already states some above, but one other major goal is to create a low-volatility coin is always independent of any other coin, currency or commodity.
Voters have the power to create either a positive or a negative correlation to bitcoin's price action. This could allow BitBay to be used as a volatility hedge against bitcoins price action. But people must remember also that since BitBay is not hard pegged, the profit potential does not stop once a trader hedges. For example, if bitcoin goes up in a bullish mini trend, but then traders feel that it could retrace, they now have 2 options: either sell their btc for a hard pegged stablecoin or sell their btc for BitBay. If they choose the former then for the most part, their ability to continue to increase their equity is done (unless they have access to margin trading and short). If they chose BitBay, their is the 'potential' that the new demand for BitBay from btc hedgers could actually cause BitBay to go up in value against BTC. This way they have the potential to continue profiting on top of their btc profit taking! There is risk obviously since nothing is guaranteed. But remember if any losses get out of control with BitBay, then voters will start freezing to protect their equity!

It should make for one hell of an interesting trade game.

BitBay.Market is just about 2-4 weeks away from presenting the decentralized peg to exchanges to test and integrate. The coding is done, it's been done since Nov. 2018.  They just have to finish up the exchange integration coding.

Hope this helps some people open up their eyes to some of the possibilities that are about to enter the industry!

It seems that stable coins are very useful for trading and for merchants to avoid high volatility of crypto. I am not confident of the backing mechanism of stable coin which are centralized like Tether, and prefer decentralized solutions like DAI.

Currently, stablecoins can create many problems in the market. This may have strong negative consequences. But in general, I think that the stablecoins are useful for the development of the market.

The fact is that I can not understand why the author considers stable coins as evil.  In any case, These coins enable many users of cryptocurrency to minimize their losses.  I have repeatedly used USDT when another cryptocurrency market collapsed and I was able to stall my capital level at a certain place.

My opinion is that they are actually good especially to attract more adopters who might be afraid of loosing money due to an unstable market when they do business transactions. Imagine using btc,  the one who accepts it will rather loose or gain when the market rises of falls. Apart from the accusations around USDT I'm sure stable coins are very cool

Stable coins make it easier to work with cryptocurrency. They are not really intended for a long storage period. It is convenient to use them when you need to quickly withdraw funds from a particular  cryptocurrency, but the time has not yet come to invest these funds in other coins or to withdraw them in fiat.
At the same time, if someone does not like to use them, it is their right.

Indeed stables coin are very much needed neccesary evil. If not for all everything stable coins offer but for the fact that stable coins is a safe haven for trader during continuous down trends. It more than neccesary to have them around I ll say it's compulsory for our safety

A stable coin is something that we need to measure the cryptocurrency with fiat value.
But too much stable coins is not good, because some of them maybe turned to be a scam coin.
There is no profit from holding stable coin, so it is not necessary to be created more of them.

I do not consider them to be evil until now. as the principal is almost the same as a coin on water. support if you put 1coin on the boat and then sail the boat into the water. it will float and even jump on the water but as the coins weight increases, the boat will become more stable and at a point when the coin becomes too much valued the boat is even gonna sink into the water and not gonna move anymore.

For liquidating the winning trading position we need to re-think about the our views on the stable cryptocurrencies. Altcoins have higher volatility and these type of stable coins can solve these problems.

Why hold stable coin, when I can keep my money in fiat currency, stable coins are not cryptocurrency. Stablecoins are regulated and centralized which is not a feature of any cryptocurrency.

And this is the biggest issue with coins backed by something, they are centralized which means that is very easy for the ones emitting the coin to defraud the trust of their investors in a way similar to banks and governments, if the recent news are correct then each tether is only backed by 74 cents and while many probably do not mind this investors were assured they were investing in an asset completely backed by US dollars, so it will not surprise me if USDT disappears during the next years as people lose trust in the coin.

Well one thing about stablecoins, you might not make any money - but you'll never lose any money either

Unless its USDT, then maybe you will when the house of cards crumbles...

I wonder how much criticism and dissatisfaction with stable coins. And at that time, when it is clearly visible that they greatly facilitate the work with cryptocurrency. Nobody forces anyone to use them. I am very pleased with the appearance of stable coins. This is really a new stage in the development of cryptocurrency. Cryptocurrency continues to evolve. Perhaps, in the future, something more perfect will appear, but for now we have stable coins in their form.

This is an interesting article. I believe crypto is here to stay! Crypto with lower volatility is also needed. We need stablecoins for that, to make some apps (dapps) function better and stable.

Stablecoin backed by Fiat are very necessary .
It's estimated that the tether stable coin has a daily volume of billions.
This is a testament to the fact that there's a demand for the development of more stable coins here.
Stable coins would accelerate mainstream Adoption of cryptocurrency.

I think the existence of stable coins in the market has been of great influence as regards creating awareness and making the crypto space easier for these business men to operate. If we look at the cryptocurrency world and its volatility, we will realize that this period only favors more of investors and not institutions or an individual that wishes to use the crypto strictly for utility token.

As these businessmen gets acquainted to using stables coins for savings and making necessary payments without the fear of volatile or the value of the fund they intend using for some particular payment settlements plunges overnight, it will become easier for all of them to migrate to BTC easily in near future when it becomes stable too.