Topic: Stablecoin censorship (Read 420 times)

Of course it is. DAI is not as popular as the aformentioned centralized stablecoins (USDC and USDT). You should expect low liquidity for DAI just because it's decentralized. If I'm not mistaken, you can find more liquidity in Uniswap. It's a DEX where you can swap DAI to any ERC-20 token living on the ETH blockchain.

Despite DAI's limitations, it's still a better choice than both USDC and USDT. There's no censorship of any kind. You and only you control access to your funds. The only risk would be DAI losing the USD peg once ETH and other crypto coins go all the way down the drain. After all, DAI is a collaterized stablecoin. If Maker (the issuer of DAI) has an emergency plan to protect DAI's USD peg, there should be nothing to be concerned about. With or without stablecoins, crypto will be here to stay for a long time.

This is why I have never understood the idea of stablecoins to begin with. There are people who bought over 100 billion dollars worth of it from the stablecoin companies, which means that if Tether bankrupts or gets seized or anything, that's tens of billions of dollars gone from the market on a single day. Why would anyone trust a company like that?

I am not saying the yare a bad company, they could be the greatest company ever, but it just doesn't feel like it means anything at all, we shouldn't trust ANY company like that, you can be amazon, apple, tesla, I do not care how big you are, you are not that good and I won't trust you with tens of billions of dollars just to hold it. Government could take it in a single day if they wanted to and that would result with all of our money gone forever. I just don't trust government to be fair, not the companies, but I know companies are forced to follow the law of the government and that's the real issue with stablecoins.

I noticed that the total trading amount of DAI per day on Binance and OKex is very very small. Will there be a problem of low liquidity if I hold DAI?

This is people's fault because they let greed drive their emotions. They forgot about what matters most (which is making money better by removing the middleman). Banks' failures in the past tells us they cannot be trusted to handle the world's economy. That's why Bitcoin was created in the first place. Bringing banks into crypto, is a terrible idea. It will only make them more powerful in the long run.

Using a stablecoin would be no different than using ordinary Fiat currencies (mainly the US Dollar). Entities in control of stablecoins can freeze or confiscate your funds at will, even if the underlying blockchain network is decentralized. That's because the smart contracts underpinning stablecoins are coded this way. It's all about making centralized stablecoins "regulatory compliant". If you want real freedom, I'd suggest you use a truly-decentralized cryptocurrency such as Bitcoin or Litecoin. As long as there are a few people resisting centralization, nothing should be able to stop the revolution. Who knows if crypto lasts for generations?

Stablecoins, despite being centralized and subject to oversight by specific entities, often lack transparency, with many of them lacking audit reports, especially the USDT coin, which CZ, the founder of Binance, likened to being like a black box that remains opaque in its operations, and we do not know precisely the specific level of its Risks. Perhaps some stablecoins may even operate without regulatory oversight. They have the power also, as OP mentioned, to freeze any investor’s assets or restrict access to his stablecoins if they find any suspicion in his transactions, and even without clear explanations, this is also like what central banks are already doing, which contradicts the principles of blockchain technology and decentralization where makes you the primary controller of your assets without their authority over you. Despite the drawbacks of stablecoins that may lead to severe losses, investors and traders cannot do without them, as they offer a protective security against market volatility.

Stablecoins are not decentralized entities anyway and you should know that. If we take Op's point as a whole, he is absolutely right. If we are in the crypto market, we exist to increase our privacy. If the administrators of stablecoins are going to embargo whoever they want and whenever they want, it makes no sense. If you have concerns, you shouldn't use stablecoins.
DAI is an ideal cryptocurrency to stay anonymous. However, since it is not stable, it carries certain risks. There are various ways to remain anonymous in the crypto market but stablecoins are definitely not one of them. As we move away from the banking system, we will defend crypto against those who try to pull crypto into the traditional market.

We are now entering a new era of cryptocurrency as well as stablecoins with the interference of the government and the past experiences the market has had. In most cases, a stablecoin can be frozen when there can be legitimate question especially on its origin and this can happen if there is hacking or even maybe illicit business transactions. Now, of course, this is censorship and this is being encouraged by the government itself with the issuing entity always pressured to do so. We should always remember that stablecoins are products of a centralized platform hence that platform must toe the line with the government otherwise there is that risk of its business. And as we are seeing in the market today, stablecoins are playing a pivotal role in everyday transactions in the crypto-verse.

Decentralisation is one of the most important ideas behind cryptocurrency. Thats what makes it powerful and different from other banking systems. It looks like stablecoins, especially centralised ones, are going against this big picture. Why would you use the flawed centralised banking system in a field that is proud of being decentralised?

I completely concur with your doubt. Thats exactly what the crypto community wanted to avoid: a single point of failure. If Tether, USDC, or any other centralised stablecoin gets value, arent we just getting a new gatekeeper? Sometimes it seems like we've forgotten why Bitcoin was made in the first place. The dream is a digital world without any one person or group controlling it. We need to keep pushing for solutions that stick to this concept and dont water it down.

They are hunting down illegal activity in the timebeing. But be aware these stablecoins can go too far if governments pressure them to do so. You could easily get your funds frozen even if you weren't doing anything wrong. Just like how banks are doing today. I'd never trust a centralized stablecoin because of this. Tether, USDC, and the likes are all subject to the single point of failure.

Crypto is all about decentralization and censorship-resistance. We should do everything possible to adopt solutions which follow crypto/Blockchain tech's original vision. Not all the other way around. Wasn't Bitcoin created as an alternative to Fiat currencies (which are empowered by banks)? Then why bother bringing banks into the game by adopting centralized stablecoins? Just my opinion

Unfortunately, the risk of freeze/blocking is real as there are centralized stablecoins but i believe they only do so in the case of large sums being moved or if there is suspicion of illicit use, the use of usdt is fundamental for traders at least

They are popular due to the fact that most people don't read about their disadvantages and they will just learn about it the hard way when their stablecoins are frozen due to some suspicious activities or transactions. I experienced how to have your assets frozen and it was not a good experience because I had a hard time explaining it to them finally I just need to send them a few documents in order to release my crypto assets in their exchanges. I guess when you have a huge amount of those stablecoins, you will gonna need some extra papers to prove them you are innocent before they let you use back your crypto. this is not the best altcoin to have for obvious reasons.

Centralization will not disappear, rather the opposite. With each new cycle, cryptocurrency will be embraced more and more fiercely by corporations, banks and regulators. Cryptocurrencies are no longer just a geek's toy, they are a huge trillion dollar market with growth potential. No one will allow such funds to move freely and uncontrolled around the world. Regulators have long been integrating their products and services to control the crypto industry, and we all obediently accept it. Look at the Worldcoin phenomenon, it's a cryptocurrency that people voluntarily carry their personal data into. These people don't even realize that cryptocurrency was created for privacy, not de-anonymization.

Probably the censorship of Tether or Circle is not great so far and they froze not many addresses. By the way, I haven't seen any freezing of accounts with small amounts. But probably as soon as CBDC appears, Tether and other stablecoins will have a serious reason to introduce serious censorship.

That's the main selling point of Bitcoin. You can use it freely without background checks, or credit checks of any kind. No one can confiscate or freeze your funds at will, because of the way BTC was designed. With stablecoins, it is different. An issuing company (middleman) takes control of the distribution and supply of the coin itself. Smart contracts are coded in a way where the creator can simply add addresses to a "blacklist" if transactions are deemed suspicious. This feature makes stablecoins centralized and prone to censorship. It's like entrusting your money to banks. You don't see that coming with decentralized stablecoins such as DAI and USDJ. Developers can change the code to "comply with regulations" if they want to, but there's nothing stopping the community from creating a fork that puts enphasis on decentralization and censorship-resistance.

Despite the inherent flaws of centralized stablecoins, don't expect them to disappear anytime soon. They will continue to gather widespread support from banks and governments worldwide until they become "a force to reckon with". It's in "Wall Street's" best interests to keep stablecoins alive for a long time. As long as we have one decentralized cryptocurrency (Bitcoin), nothing else matters. Just my thoughts

That's right, governments have been trying to censor bitcoin for a very long time. It is important for governments to control all financial flows and have leverage.


It's very possible. If you use bitcoin for P2P transfers, you don't need any censorship and AML checks, but as soon as you try to use bitcoin as a means of payment in traditional finance, your bitcoins can easily be censored. Mass Adoption will not happen without the global integration of bitcoin into traditional finance, i.e. banks, stores, services, etc. Bitcoins may well be censored when interacting with these entities.

Exactly. Bitcoin can be used regardless of government censorship because of the way it was designed (decentralization). Stablecoins like USDC and USDT are more like credit/debit cards which can be censored at will. They're starting to look like CBDCs. I don't like the fact that these centralized stablecoins are used by "De-Fi" protocols. It greatly defeats the entire purpose of crypto/Blockchain tech. We should change the name from "De-Fi" to "CeDe-Fi" (Centralized/Decentralized Finance). Truly-decentralized finance would only use censorship-resistant alternatives to help eliminate the middleman from the system.

Despite the downsides of using centralized stablecoins, don't expect them to go anywhere soon. They will become bigger and stronger than ever, as long as "Wall Street" keeps supporting them. Who knows if they will become the new CBDCs everyone was talking about?

Stable coins perform their function relatively well, before they were created many of those that wanted to deal with cryptocurrencies found themselves in a difficult position once they wanted to sell their coins and send their profits back to their bank accounts, and it was not rare to hear stories of people getting their bank accounts blocked due to the transactions they received, so stable coins were a good way to avoid that scenario, but if governments begin to take legal action against them then their reason to exist will disappear and people will find themselves facing those problems again.

Why is that the market can't exist without stablecoins? Could you explain that more? The first stablecoins were issued only in 2014.

There are risks involved with stable coins but since they have become a very important player in the cryptocurrency market they could not just be dismissed outright. I am using stable coin too and I find them to be convenient and can protect my gains while trading some digital assets. However, we know that stable coins are issued by centralized platforms and because of this fact alone they can easily do whatever they want...whether we agree or disagree with them. Now, am just wondering...is it not possible to have decentralized stable coin? Sorry if this can be just another naive question.

It's not Bitcoin that's trying to be censored, it's the governments that are trying to censor it. But yes I get your point.

But it's simply impossible regardless of all these AML checks, KYC, strict regulations, etc. If Bitcoin is not accepted at McDonald's for example because the government orders it, it's not Bitcoin that's censored but McDonald's. If a McDonald's branch resists and accepts Bitcoin, then Bitcoin can be used. It's because Bitcoin can't be censored.

This isn't the case with USDT and USDC. Their users can't use their tokens even if they want to because they're censored. Nothing like this can happen with Bitcoin.