Topic: Biggest problems with Banks stablecoins can solve this (Read 253 times)

In my oppinion stablecoins are not risk-free, despite the fact that they promise price stability in the erratic cryptocurrency market. The following are some of the main dangers connected to stablecoins:

1. Depegging Risk: Peg loss The possibility of a stablecoin losing its peg to the underlying asset—typically a fiat currency like the US dollar—is the biggest danger. This may occur for a number of causes, such as:
Inadequate reserves: The value of the stablecoin may decrease if the issuer does not have enough reserves to redeem every token.
Panic on the market: When there is turbulence in the market, investors can be quick to sell stablecoins, which might cause a loss of confidence and even depegging.
Regulatory concerns: A stablecoin's stability may be impacted by modifications to laws or legal disputes.

2. Counterparty Risk:
Issuer insolvency: If the issuer of a stablecoin becomes insolvent, it can lead to significant losses for investors. This risk is particularly high for stablecoins that are not fully backed by reserves.

3. Liquidity Risk: Difficulty selling: Selling a stablecoin during tense market conditions can be challenging, particularly if there is a dearth of available liquidity. There may be sharp drops in price as a result.

4. Smart Contract Risk: Technical flaws: Should a stablecoin's smart contract contain flaws, hackers may be able to take advantage of them and cause losses for investors.

I do agree that stablecoins could never replace fiat, and I also think that we are going to see lesser and lesser amount of investment towards it as well. Because it's clear that we are going to see stablecoins being very centralized, and if I am going to use dollars in centralized way, I rather it be the government than some company.

This is why it's quite important and I can make some sense into this as well, it is very hard to make some money with the way I am looking right now into stablecoins. Even with some interest, it is not worth it and it is not that good, banking and normal fiat is a lot better than stablecoins. Don't get me wrong I love crypto, and I love bitcoin, I just have a special dislike towards stablecoins that's it.

That I believe is also one of the major reasons why a lot of people have their confidence with the banking system. Because in case of failure, there's an assurance that they won't totally lose their funds because there's insurance involved. Whereas, when you talk about stable coins like UST or USDT, the risk is very high as the people behind it won't refund or return their money when the value starts to decline. It is the risk taken by its holders when it comes to digital currencies.

USDT is still a private currency. Anything that is owned can be private, of a certain society, which is a type of private and public. In this case, USDT is the property of individuals, that is, all the same private property. And where there is private property, the risks increase compared to public property.

But let's hope that everything will be fine with USDT and nothing bad will happen to it for a long time. I myself use mainly USDT from stable coins

You still ignored the fact that USDT is private owned and there's always chance of failure, bank still needed because not all people want to risk their money in a private owned asset that could be gone within a blink of an eye, always remember stablecoin also has its share of nasty history of losing its peg within few hours and people losing billions and yes I'm talking about LUNA's famous incident where the UST literally lost its peg.

bank is heavily regulated and also sometime have reimbursement for any incident that's happening, good for people who don't like to risk their money.

so, both are still needed.

Of course, banks can be slow and expensive, and stablecoins such as USDT are indeed faster and often cheaper. However, it's not that simple to say that this makes stablecoins the complete solution. For one, banks are adapting. Many test stablecoin technologies for their own sake, such as JPMorgan with its JPM Coin for faster cross-border transactions.

But stablecoins are a growing breed, and they do come with some significant risks. Many, particularly those backed with assets such as commercial paper, can lose value during periods of market stress; that, in turn, might lead to loss of confidence and ultimately liquidity problems. Regulations around stablecoins are also tightening, so it's not that clear how long they'll operate outside of the oversight that banks are currently subject to. So, as helpful as stablecoins can be, especially within the fintech arena, the reaction at both the banking and regulatory level is one to watch. They may not be obsolete just yet.

Moreover, if I have to choose a digital currency Bitcoin will be the first choice, the stablecoins are centralized not so different than Bank, except the transaction speed, other risk and issue of Bank is persist in the stablecoins.

Stable coins are not investment and they are bad for your fund safety too. It's your topic.
PSA: Most Stablecoins Can Be Frozen, Even in Your Own Wallets

First of all, it's hard to know why you bumped this inactive thread.

About USDT (Tether stable coin), it is not a private currency. USDT is deployed on many public blockchains, Bitcoin on OMNI layer, Ethereum on ERC-20 chain, then BSC, TRC20 and some other altcoin blockchains. All these blockchains are not private like Monero.

Two years ago, around fiascos of Terra (LUNA and UST stablecoin depeg and death spiral) and FTX, there were massive fear and many questions around stable coins and companies behind them. I remember that I read Tether's ToS that they can allow users to redeem or don't allow users to redeem. It's big risky term from Tether company.

Redeem Tethers to fiat currency. Their guide says you only can redeem with some conditions, and the min redeem value is $100,000 which is big for most of Tether users. Hence, if you are not rich, let's assume you're unable to redeem your USDT to fiat currency.

Your choice will be selling USDT to your fiat currency but generally Tether's redeem process is not accessible for all users.

USDT stablecoin is a private currency, although it is 80 percent backed by dollars. Its issuer is a private company Tether Holdings Limited (formerly Realcoin). The asset is issued and redeemed through the Tether.to platform. Realcoin was founded in 2014 by Brock Pierce, Reeve Collins and Craig Sellars. If this company goes bankrupt, USDT holders could suffer large losses. This should always be remembered and its use should be treated with caution.

But as a buffer between fiat currency and cryptocurrency, USDT provides people with certain conveniences. But I do not think it is a good investment for the long term. It is most likely a tool for current financial transactions and a storage platform in the short and medium term.

That's why the "", but some do think of those like investments and in some extreme cases you could even make a profit, so not only you're not losing purchasing power but since the whole thing is going down the drain each of your $ is worth more in that crumbling economy, land, houses, almost everything that is tied to the economy in that particular area. But, not the ideal scenario and not the way I want to live my life.


The economic situation triggers the demand, and a meltdown in crappy economies triggers a rush to a safe haven, it's almost the same as in BTC but with a twist, while some try to escape a devaluating currency to USD, with BTC more look for gains now, not protecting their wealth. So, demand that triggers value, vs constant value that triggers demand. Quite the opposite of what one would have expected.

As long as its market value is changing, it could be considered as an investment because there is a profit being anticipated. Problem is, in fiat and fiat based digital currency (inline) increases only depending with economic situation and is not based on demand directly or what not. There are even people who managed to made some profit on the increase with USD exchange over other currencies.

But going back, OP have mentioned about problems concerning transaction. The problem I guess with the situation is more concerned with different banking institution which will cause delay. We are already there. Banks have disadvantages but it is serving its purpose still. I'd more prefer viewing this industry separated from one another.

From what I can see, I think you are counting more than it should be on the stablecoins because in the end none of our trustworthy and people won't use any stable for investment normally because of the risk they should get. That's why and due to lack of the trust in stablecoins that's possible to rely on stablecoins, in the other hand if you consider stablecoins for huge and international trades it won't be useful for a government to use stable coins because of the market cap of these coins.

Can you share more light on how we can profit from investing in stablecoins usdt? am very curious about that statement and I don't mind if you can give brief info on it. 
Connecting usdt to the ATM will not give you or anyone any financial freedom because they are equally centralized and can be easily manipulated just as fiat is.
Your love for usdt is alarming 

That's right, it's better for me to keep my money's worth in fiat than in USDT or other stable coins, it's very dangerous as you said, stable coins can be frozen by the developer whenever he wants. A close example is the stable coin TerraUST which brought destruction to the development of their ecosystem even though not because it was frozen but everything has the potential to be destroyed if something goes wrong or even proven fraud, I think that can be used as an example by us not to save money in stable coins especially if you invest in it. And it is true that USDT operates on the edge of the law and is the object of investigation due to many suspicions of fraud.

How about practicing your obsession with so-called stablecoins where it belongs -> Altcoins // Isn't Bitcoin also a much better solution than fiat, because you can make a transaction whenever you want, cheap and relatively fast + as a rule, one confirmation on the network makes the transaction safe - although for larger amounts the recommendation goes to 3+ confirmations.


It has already been mentioned, but for me, centralized fiat is safer than centralized USDT, which can be frozen at any time, and who says that it is pegged in a 1:1 ratio with anything? Out of everything that exists in the world, you decided to believe in something that is completely centralized and owned by private companies that operate almost on the edge of the law and can at any moment become the subject of an investigation, and then your stablecoins will be worth one big nothing.

USDT, CBDC, Cash, Digital Fiat, etc are have same value, I failed to understand how you can say USDT is the best investment.

If we talking about the safety and security, USDT is centralized and the CEO can freeze the token even you hold the coin in your own non custodial wallet e.g. a wallet where you have full control over your token except you share your seed phrase to other people.

If we talking about the price, USDT is stick with fiat value where the price always inflated and the value will always decrease.

It's a lot more of 'hedging' than 'investing' in this case. An investment is mostly referred to something whereas you expect profit. On the other hand — people from countries with crappy fiat money hold USD to limit risk, not necessarily to profit (unless you attempt to get in and out, forex trader style).

When you say that stablecoins like USDT offer advantages over traditional banking, I can see where you're coming from. On the other hand, I cannot agree with you that stablecoins are a "great" or "safe" investment. A stablecoin's value follows that of the underlying currency it is tethered to, in this case the US dollar. You are, then, merely storing a digital representation of the money you already possess. It's the same as keeping money in the bank or a savings account with a regular financial institution.

There may be advantages to adopting stablecoins in terms of transaction speed and simplicity, but I wouldn't put all my money into stable coin (they are not a term of investment). Bitcoin, gold, real estate, and more alternatives exist. More money can be made using bitcoin and other cryptocurrencies. Keep in mind that there is always some degree of risk involved with investing. But if you have faith in digital currency, you will be compensated

Well we all want life to be Simple and a lot freedom.
Also btc is good too but it's pure DCA Investment thing.
But in rate hikes situation the USDT Will go up and purache power Will go up.

Anyways it's hassle to use Banks to send money to canada to USA and to UK to europe the banks not connected and it's not liquid at all.
The future plan
Cash will stay together with USDT and backed by btc or trx

But all those uncertanity situation the USDT busd and USDC loking most safest.
USDC circle and blackrock is good If black rock Will get into something then it got to be serious so USA Stable coin is serious.
Soon eu and UK Will do their own tron it eth Stable coin connected with cash atm then we all gona rock

Huh? Investment on stablecoin? Investment means you can make profits from it. If not, then you are merely just holding and storing your assets. That's not investment.
And in order to make profits from your investments, you have to take risks. Otherwise, what is there which you could call investment?
You may have a good speed for transaction. Maybe if you are willing to spend your money, then that should be good. Otherwise, don't go for stablecoin if you are trying to make some money from your investments.

It is an investment if you're a country in which the currency is going downhill, so if you have and you get paid in Turkish Lira, Argentinian Peso, or Rial,  yeah, USDT could be considered some kind of "investment", as you basically invest in foreign currency, of course with the said risks of owning a token that might be worthless tomorrow.

But if you're in the US or EU this makes as much sense as any other of this guy and his clone accounts ideas! Just think about how he solves all the liquidity problems caused by the forex market by connecting USDT to all ATMs!