Could stable coins save a deprecating economy - page 2.

bitgolden

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Quote from: Abiky on November 09, 2023, 06:30:51 AM

How would stablecoins save a depreciating economy? Aren't them tied directly to the value of national (Fiat) currencies? I appreciate the UK's efforts in embracing the revolution with open arms. But simply adopting stablecoins is not enough to save their economy. Putting inflation under control is what will eventually solve the problem. The thing is, our world is going from one crisis to another. With the COVID-19 pandemic still at large, rising geopolitical tensions, and wars, we can never expect the mainstream economy to recover.

I know crypto/Blockchain tech is the future, but it's not a "magical pill" to solve all of our problems. One thing for sure is that stablecoins are utterly-centralized. Why would I trust a stablecoin that can be easily manipulated at will? It's even worse than Fiat. I'd prefer truly-decentralized cryptocurrencies not driven by a company's own interests. Bitcoin has greater potential to save our economy. Some countries already adopted it as legal tender and the results have been impressive. Maybe our world will switch to the "Bitcoin Standard" someday? Cheesy

Honestly it was an old topic that people already answered on how that would not be possible. Obviously, as with any idea in the world, there were some people who think that it was possible, there are people who think that lizard people live among us too, so it is not like any idea is too far fetched for some people, if you make sure that they do end up with thinking it would save those economies, but the reality is that the common mind would say that it is not possible, and that's what majority of the people here said.

I think it is clear that the topic was silenced and not getting any response for a long time now because of that, people already said that it would not be possible and it would be quite unlikely to happen.

vv181

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Quote from: mich on November 08, 2023, 01:13:34 AM

Well maybe they can and this is why Bank of England has now released a stablecoin regulation plan. They want to bring stablecoins in its real economy.
~

Nice information, but it is a different context.

What is envisioned by OP is that stablecoin helps in times of economic downturn, on the other hand, the paper, from what I skimmed, is mainly a regulation framework proposal. This has nothing to do with saving the economy, but rather to regulate its usage.

They did not offer this regulation to solve and helps the economy but rather to govern external factor that contributes to their internal economic system. So as I already said, stablecoins certainly can not become the sole solution that helps the economy.

Bureau

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Quote from: Abiky on November 09, 2023, 06:30:51 AM

How would stablecoins save a depreciating economy? Aren't them tied directly to the value of national (Fiat) currencies? I appreciate the UK's efforts in embracing the revolution with open arms. But simply adopting stablecoins is not enough to save their economy. Putting inflation under control is what will eventually solve the problem. The thing is, our world is going from one crisis to another. With the COVID-19 pandemic still at large, rising geopolitical tensions, and wars, we can never expect the mainstream economy to recover.

All stablecoins are pegged to USD and if done correctly then it can boost the economy. In countries like Lebanon and others where there is too much fluctuation in local currency, using stablecoin would help them. In countries where the local currency is stable using stable coins would only destroy their economy. Then there is a big question as to why use a stablecoin as it will indirectly give economic control to the USD or the US government. What the UK government is doing just replicating their pound to a stablecoin and creating their form of CBDC I think.

Abiky

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Quote from: mich on November 08, 2023, 01:13:34 AM

Well maybe they can and this is why Bank of England has now released a stablecoin regulation plan. They want to bring stablecoins in its real economy.
Executive director of Consumers and Competition at the Financial Conduct Authority Sheldon Mills had good things to say for stabelcoins. 'Stablecoins have the potential to make payments faster and cheaper for all, and that’s why we want to offer firms the ability to utilise this innovation safely and securely'.
https://www.bankofengland.co.uk/paper/2023/dp/regulatory-regime-for-systemic-payment-systems-using-stablecoins-and-related-service-providers

How would stablecoins save a depreciating economy? Aren't them tied directly to the value of national (Fiat) currencies? I appreciate the UK's efforts in embracing the revolution with open arms. But simply adopting stablecoins is not enough to save their economy. Putting inflation under control is what will eventually solve the problem. The thing is, our world is going from one crisis to another. With the COVID-19 pandemic still at large, rising geopolitical tensions, and wars, we can never expect the mainstream economy to recover.

I know crypto/Blockchain tech is the future, but it's not a "magical pill" to solve all of our problems. One thing for sure is that stablecoins are utterly-centralized. Why would I trust a stablecoin that can be easily manipulated at will? It's even worse than Fiat. I'd prefer truly-decentralized cryptocurrencies not driven by a company's own interests. Bitcoin has greater potential to save our economy. Some countries already adopted it as legal tender and the results have been impressive. Maybe our world will switch to the "Bitcoin Standard" someday? Cheesy

mich

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Well maybe they can and this is why Bank of England has now released a stablecoin regulation plan. They want to bring stablecoins in its real economy.
Executive director of Consumers and Competition at the Financial Conduct Authority Sheldon Mills had good things to say for stabelcoins. 'Stablecoins have the potential to make payments faster and cheaper for all, and that’s why we want to offer firms the ability to utilise this innovation safely and securely'.
https://www.bankofengland.co.uk/paper/2023/dp/regulatory-regime-for-systemic-payment-systems-using-stablecoins-and-related-service-providers

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Quote from: Thehallows on August 17, 2023, 06:01:44 AM

Introducing stablecoins as a major currency in countries experiencing economic instability is an interesting idea that has both potential benefits and challenges. I don't really know if this would be a good idea but I think this could help many countries that are facing a real currency depreciation.
This are some of the benefits I think I could bring

Stability: Stablecoins are designed to be less volatile than traditional cryptocurrencies like Bitcoin or Ethereum. This stability could provide a more reliable medium of exchange and store of value, especially in economies with rapidly depreciating currencies.

Inflation Control: Stablecoins are typically pegged to a stable asset like a fiat currency or commodity, which could help countries better control inflation and manage their monetary policy especially in African countries.

Financial Inclusion: Stablecoins could increase financial inclusion by providing access to digital financial services for individuals who are unbanked or underbanked.

Reduced Transaction Costs: Digital transactions using stablecoins can potentially be more efficient and cost-effective compared to traditional payment systems, especially for cross-border transactions.

Please share your insights on this topic.

You've got it all wrong. Stablecoins don't solve the inflation problem. After all, they're directly tied to Fiat currencies (usually the USD). The only benefits they bring are portability, faster and cheaper transfers (depending on the Blockchain network they're deployed into), and programmability.

With CBDCs right around the corner, it's likely stablecoins will cease to exist in the future. After all, governments will have more power/control with a CBDC than a privately-owned stablecoin. The future is unpredictable, so expect the unexpected. Maybe stablecoins will get to live alongside government-issued digital currencies (CBDCs) forever? Just my thoughts Grin

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I think it's a double edged sword. Knowing that it has both potential to save the economy when done properly and at the same time, it could worsen it.

The most important part for a country that has this situation is that their leaders should have the knowledge and probably a different one because they just make it worse with a different way. They are the ones responsible why they have that kind of economy. It shouldn't be repeated when dealing with it.

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Quote from: aseprebel on August 19, 2023, 02:02:33 AM

stablecoins could provide some benefits in stabilizing a depreciating economy, they are not a comprehensive solution and should be considered as part of a broader strategy. Economic stability requires addressing underlying issues that cause depreciation, such as fiscal and monetary policy, structural reforms, and addressing external factors.

Stable coins might have that word " Stable " but they can still decline like a normal currency so I don't think they can provide a solution but unless maybe if we are talking about an almost dead currency like what have happened to the currency of some countries, as most stable coins in cryptos are backed by a dollar. As you said, they can only lend some help, so we shouldn't entirely depend on them.

Quote from: aseprebel on August 19, 2023, 02:02:33 AM

Additionally, careful regulation and oversight are needed to ensure that stablecoins are used responsibly and do not lead to unintended negative consequences.

As I said earlier, Stable coins are like a regular currency, they are centralized and already regulated. There is still better than a Stable coin and that is, non-other than Bitcoin. Stable coins are still subject to inflation but Bitcoin is an anti-inflation.

goaldigger

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That’s not the purpose of a stablecoin and seriously the economy of the country is too big to handle and imagine even Dollar and gold can’t control inflation so what more of a stablecoin. We must accept that inflation is inevitable, we can only delay it but sooner or later it will still rise simply because of growing population and the supply is getting limited. Stablecoins are not stable at all, so be careful on holding it.

vv181

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The fundamental issue of economic instability can not be solved by a mere stablecoin. Besides you did not exactly state in which FIAT-backed currencies or assets the stablecoin is relying upon.

A country has its own regulation and law in regard to the currency that can be utilized within its own respective country, they can not simply force their citizen to use an obscure stablecoin which as of now does not test thoroughly for widespread usage, especially for country economic-specific purposes. So here you did not include the main aspect of the true roots of the economic instability problem.

Magic-Money

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Stable coin has nothing to do with country economy challenge's that the world is facing today, the major reason for a stable coin is for trading pair value, for instant, as a Bitcoin trader, when the market going down or experiencing depreciating in Bitcoin or other alt-coins value, for a better position is to convert your Bitcoin or other alt-coins into stable coin like USDT, BUSD and many more, to maintain your digital asset value. Not to depreciate much in value.

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stablecoins could provide some benefits in stabilizing a depreciating economy, they are not a comprehensive solution and should be considered as part of a broader strategy. Economic stability requires addressing underlying issues that cause depreciation, such as fiscal and monetary policy, structural reforms, and addressing external factors. Additionally, careful regulation and oversight are needed to ensure that stablecoins are used responsibly and do not lead to unintended negative consequences.

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Quote from: Thehallows on August 17, 2023, 06:01:44 AM

I don't really know if this would be a good idea but I think this could help many countries that are facing a real currency depreciation.

Sorry it will not. Stable coins have depreciating value like you have criticized fiat. How can stablecoin help an economy? Just a digital currency and how can that be possible when people are dumping their currency for bitcoin that is not tied to any debt repayment. Moreover, countries are architect of their own misfortune and currency can't just be the messiah. Rather it is the policy of government that has devalued fiat and they know how to get out of it by thinking properly otherwise more people are already dumping and hodling bitcoin.

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Stablecoins won’t help traditional economies. You have to remember the dollar is being abandoned as the world’s reserve currency due to the US amassing debt with money printing and currency devaluation set in place for decades. People don’t want more access to dollars, they want money free from government manipulation and debts.

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Quote from: Dr.Bitcoin_Strange on August 18, 2023, 06:57:13 AM

Quote from: Thehallows on August 17, 2023, 06:01:44 AM

Stability: Stablecoins are designed to be less volatile than traditional cryptocurrencies like Bitcoin or Ethereum. This stability could provide a more reliable medium of exchange and store of value, especially in economies with rapidly depreciating currencies.

stability and depreciation? A coin can be stable, but its value can still depreciate in some circumstances. If the stable coins are backed by a physical asset whose value is also bound to depreciate with an increase in the inflation rate, will it still save the economy? Most of those stable coins are backed by some fiat, like the USD, which means if the value of the USD depreciates, they will also be affected. Even volatile assets like Bitcoin are very important in the economy; they're a hedge against inflation as their value can greatly improve over a short or long period of time, but if inflation strikes, fiat drop in purchase power due to value depreciation.

Basically the logic is that stablecoin is pegged to dollars and dollar loses its value every year due to inflation. Which means that we are going to end up with something that will change the end result, you are not making a profit by holding it.

Not a lot of good passive income from them neither, some places give you like 2.5% or so return for keeping your USDT with them, but in most cases inflation is higher, and that means that you are not making any profit at all, you are losing it. The only acceptable reason to have it is that bitcoin may crash, and because of that you may end up getting a bigger result and should see some changes for sure. I think it's important to do something like that in order to have a greater return.

hugeblack

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Stablecoins are a digital representation of the dollar on one of the blockchains with promises that its value will be equivalent to 1 dollar and this promise is made by companies while local currencies are promises that your currency has a value that is determined and defended by the central bank in your country and therefore in many cases local currencies are better than stablecoins Because promises from a central bank are much better than a company, and these currencies are linked to the value of the dollar, and there are many currencies linked to the dollar, such as the currencies of the Arab Gulf.

Stablecoins will not help countries and may be harmful even at the level of individuals.

Dr.Bitcoin_Strange

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Quote from: Thehallows on August 17, 2023, 06:01:44 AM

Stability: Stablecoins are designed to be less volatile than traditional cryptocurrencies like Bitcoin or Ethereum. This stability could provide a more reliable medium of exchange and store of value, especially in economies with rapidly depreciating currencies.

stability and depreciation? A coin can be stable, but its value can still depreciate in some circumstances. If the stable coins are backed by a physical asset whose value is also bound to depreciate with an increase in the inflation rate, will it still save the economy? Most of those stable coins are backed by some fiat, like the USD, which means if the value of the USD depreciates, they will also be affected. Even volatile assets like Bitcoin are very important in the economy; they're a hedge against inflation as their value can greatly improve over a short or long period of time, but if inflation strikes, fiat drop in purchase power due to value depreciation.

Adreman23

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Using stablecoins in unstable economies has its benefits, like stability and easy digital transactions. But there are things to consider too. Governments might worry about how it all works and setting up the tech in less advanced places. Getting people to trust and use stablecoins could be a challenge. And relying too much on them might affect a country's control over its economy.

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Stable coin just like FIAT money. Indeed it is easier to get stable coins than FIAT money. As in some places where there is no currency exchange. Of course it is easier to get stable coins from the exchange market on the internet. But my question is whether the stable coin can be used in that country?

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There's no such traditional cryptocurrency or modern cryptocurrency in the first place!

To fight against depreciating economy aka inflation, you need to convert all of your fiat into something that the price will keep increase in the long run e.g. gold, Bitcoin. Stable coin or CBDC is backed by fiat, which mean the price will inflated overtime.

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