STABLECOINS CAN STOP HYPERINFLATION?

Wenbing

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There is gold in volatility..

Quote from: cytpoway121 on April 18, 2020, 04:06:33 AM

I think you mixed up the role of the stable coins
Stable coins have no role in the volatility of bitcoin or altcoins.

Stable coin role is in itself to remain in a stable price either in a bull or bear season.

The volatility in crypto currency will continue because that's the only way bitcoin can be 7000$ today, and 20,000$ tomorrow.

The most important, always do your own research

Great comment.
But I don't agree with you on your opinion because the economic concept of stability means anti-volatility.

The more stable a coin is the more confident a potential investor be to invest.

cytpoway121

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I think you mixed up the role of the stable coins
Stable coins have no role in the volatility of bitcoin or altcoins.

Stable coin role is in itself to remain in a stable price either in a bull or bear season.

The volatility in crypto currency will continue because that's the only way bitcoin can be 7000$ today, and 20,000$ tomorrow.

The most important, always do your own research

slackovic

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Quote from: bitmover on April 16, 2020, 05:15:43 PM

Quote from: slackovic on April 16, 2020, 01:35:44 PM

Quote from: gentlemand on April 16, 2020, 01:32:52 PM

Quote from: slackovic on April 16, 2020, 01:31:26 PM

But there are stablecoins not pegged to a dollar, but to a gold or some other precious metal. At least their creators say they are pegged. But like with stablecoins pegged to a fiat, stablecoins pegged to precious metals are being audited regularly so there shouldn't be an issue.

But once again that doesn't make them anything special. They're tied to the value of a much larger market with added risks too.

Some seem to believe they solve a financial problem like a proper cryptocurrency. The only one they do solve is trading shitcoins in more shitholes.

No one said (at least not me) that they solve any financial problem. They don't solve anything except giving traders a way to escape to some stable coin (that has less volatility) when they expect price of BTC or any other coin to fall.

I think there are many misconceptions in this discussion.

Stable coins are private debt.

A company says: "Give me 1 USD and I will give you back a cryptocurrency which, if you bring it back to me I will pay you back your 1 usd with ZERO interest rate".

People who hold stable coins are just lending money with zero interest rate. It is much better to have dollar itself.
The problem is that you don't know if Tether or whaever company can really pay back that loan.

About GOLD stable coins that's exactly the same. Actually, it is exactly the same as buying a Gold ETF.
The major problem is that if you buy an ETF there are much more regulations on them, so you are safer. Do you think any stable coin will spend millions of dollars per year in auditions and stuff like that, such as ETF GLD or IAU?

Of if a stable coin is holding an ETF, which is possible, that is just double risk.

Stable coin idea is really amazing. However, for that to work we really need strong regulation. Otherwise, stable coins issuers will just run away with people's money. Technology is here to stay, so I believe in future even those gold etfs, stocks, etc may use blockchain transactions. It would be cool if GLD or IAU itself made their own cryptocurrencies, for example.

I agree with you that no one can really be sure that issuers of stablecoins have enough fiat/gold to pay back the loan. But they do have audits. USDC has monthly audits by a company that checks their USD balance and if they issued more USDC than they have fiat. But I definitely agree that more regulation is needed in stablecoins.

pooya87

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Quote from: Wenbing on April 16, 2020, 12:24:52 PM

You said that's a weird question? Well I don't think it is if you're familiar with the way money work.

Think over this:
Why is the USD the global reserve currency? It is because it is stable and that stability comes from the fold that the currency is tied to.

So, the items a stablecoin is tied to affect its stability in a technical way.

i wouldn't say that is the reason, USD became world's currency in the midst of world war 2 crisis and one of the main reasons why that agreement took place at that time was the crisis and also the fact that USD is backed by the largest gold reserves. not to mention that no fiat currency can be stable ever due to their unavoidable inflation.
this is exactly why US is afraid of any country that shows any major growth, that is why they have been at war with China for some time now.

figmentofmyass

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Quote from: gentlemand on April 16, 2020, 01:32:52 PM

Quote from: slackovic on April 16, 2020, 01:31:26 PM

But there are stablecoins not pegged to a dollar, but to a gold or some other precious metal. At least their creators say they are pegged. But like with stablecoins pegged to a fiat, stablecoins pegged to precious metals are being audited regularly so there shouldn't be an issue.

But once again that doesn't make them anything special. They're tied to the value of a much larger market with added risks too.

there are two fundamental problems that bitcoin solves:
-3rd party trust
-inflation

stablecoins pegged to gold may not address the first problem, but they do address the second one. it's like paper gold 2.0---it's still paper gold, but you can transfer it instantly/electronically, trade it on non-custodial exchanges (avoid KYC), easily hedge crypto or fiat value.

as someone who still regularly uses centralized brokers and exchanges for needed liquidity, i see some value in that. i'd much rather trade a liquid gold stablecoin than trade physical gold or use a traditional broker.

bitmover

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Quote from: slackovic on April 16, 2020, 01:35:44 PM

Quote from: gentlemand on April 16, 2020, 01:32:52 PM

Quote from: slackovic on April 16, 2020, 01:31:26 PM

But there are stablecoins not pegged to a dollar, but to a gold or some other precious metal. At least their creators say they are pegged. But like with stablecoins pegged to a fiat, stablecoins pegged to precious metals are being audited regularly so there shouldn't be an issue.

But once again that doesn't make them anything special. They're tied to the value of a much larger market with added risks too.

Some seem to believe they solve a financial problem like a proper cryptocurrency. The only one they do solve is trading shitcoins in more shitholes.

No one said (at least not me) that they solve any financial problem. They don't solve anything except giving traders a way to escape to some stable coin (that has less volatility) when they expect price of BTC or any other coin to fall.

I think there are many misconceptions in this discussion.

Stable coins are private debt.

A company says: "Give me 1 USD and I will give you back a cryptocurrency which, if you bring it back to me I will pay you back your 1 usd with ZERO interest rate".

People who hold stable coins are just lending money with zero interest rate. It is much better to have dollar itself.
The problem is that you don't know if Tether or whaever company can really pay back that loan.

About GOLD stable coins that's exactly the same. Actually, it is exactly the same as buying a Gold ETF.
The major problem is that if you buy an ETF there are much more regulations on them, so you are safer. Do you think any stable coin will spend millions of dollars per year in auditions and stuff like that, such as ETF GLD or IAU?

Of if a stable coin is holding an ETF, which is possible, that is just double risk.

Stable coin idea is really amazing. However, for that to work we really need strong regulation. Otherwise, stable coins issuers will just run away with people's money. Technology is here to stay, so I believe in future even those gold etfs, stocks, etc may use blockchain transactions. It would be cool if GLD or IAU itself made their own cryptocurrencies, for example.

slackovic

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Quote from: gentlemand on April 16, 2020, 01:32:52 PM

Quote from: slackovic on April 16, 2020, 01:31:26 PM

But there are stablecoins not pegged to a dollar, but to a gold or some other precious metal. At least their creators say they are pegged. But like with stablecoins pegged to a fiat, stablecoins pegged to precious metals are being audited regularly so there shouldn't be an issue.

But once again that doesn't make them anything special. They're tied to the value of a much larger market with added risks too.

Some seem to believe they solve a financial problem like a proper cryptocurrency. The only one they do solve is trading shitcoins in more shitholes.

No one said (at least not me) that they solve any financial problem. They don't solve anything except giving traders a way to escape to some stable coin (that has less volatility) when they expect price of BTC or any other coin to fall.

gentlemand

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Welt Am Draht

Quote from: slackovic on April 16, 2020, 01:31:26 PM

But there are stablecoins not pegged to a dollar, but to a gold or some other precious metal. At least their creators say they are pegged. But like with stablecoins pegged to a fiat, stablecoins pegged to precious metals are being audited regularly so there shouldn't be an issue.

But once again that doesn't make them anything special. They're tied to the value of a much larger market with added risks too.

Some seem to believe they solve a financial problem like a proper cryptocurrency. The only one they do solve is trading shitcoins in more shitholes.

slackovic

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Quote from: gentlemand on April 16, 2020, 01:15:02 PM

Why do so many people have such a weird conception of what stablecoins are?

All they are are dollar tokens with dubious means of redemption. They are 100% tied to whatever policies are imposed on the dollar with the added spiciness of not knowing whether certain ones are backed by proper dollars and the possibility the person controlling them will tell you to piss off if you try to exchange them for real dollars.

That makes them multiple times crappier than a real dollar. They're a creature of cryptoland with huge added dangers and uncertainty. They ain't changing anything for the better and may change other things for the worse.

But there are stablecoins not pegged to a dollar, but to a gold or some other precious metal. At least their creators say they are pegged. But like with stablecoins pegged to a fiat, stablecoins pegged to precious metals are being audited regularly so there shouldn't be an issue.

gentlemand

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Welt Am Draht

Why do so many people have such a weird conception of what stablecoins are?

All they are are dollar tokens with dubious means of redemption. They are 100% tied to whatever policies are imposed on the dollar with the added spiciness of not knowing whether certain ones are backed by proper dollars and the possibility the person controlling them will tell you to piss off if you try to exchange them for real dollars.

That makes them multiple times crappier than a real dollar. They're a creature of cryptoland with huge added dangers and uncertainty. They ain't changing anything for the better and may change other things for the worse.

Wenbing

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There is gold in volatility..

Quote from: ?? on ??

Quote from: pooya87 on April 15, 2020, 11:13:22 PM

Quote from: ?? on ??

2. Stablecoin is only as stable as asset/fiat which backed it. If the asset/fiat experience inflation, the stablecoin also got inflated.

i don't think stability of a stable coin has that much to do with what it is backed by. in fact i believe that a stable coin is only as stable as the users of that coin perceive it. for example 1 Tether is only worth $1 as long users are not willing to buy/sell it at a higher or lower price. otherwise it doesn't matter. of course the very large supply and a huge number of users contributes to that stability but in the end it comes down to that demand. if some day that demand changes we see the price change too. we have already seen it crash to $0.9 and $0.85 before.

I think you missed my point. Even if 1 Tether is worth $1, it's possible USD experience hyperinflation which weaken USD purchase power/value and 1 Tether have weaker purchase power/value.

What we should agree on is that there are many variables that affect the stability of a stablecoin. They are:
1. Demand for stablecoin
2. Supply of stablecoin.
3. The mode of collaterization
Among other factors.

Wenbing

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There is gold in volatility..

Quote from: pooya87 on April 15, 2020, 11:13:22 PM

that is a weird question! how can something that supposedly is pegged to something that inflates (ie. fiat) prevent inflation? if anything when these companies print more and more of their coin they are contributing to inflation.

Quote from: ?? on ??

2. Stablecoin is only as stable as asset/fiat which backed it. If the asset/fiat experience inflation, the stablecoin also got inflated.

i don't think stability of a stable coin has that much to do with what it is backed by. in fact i believe that a stable coin is only as stable as the users of that coin perceive it. for example 1 Tether is only worth $1 as long users are not willing to buy/sell it at a higher or lower price. otherwise it doesn't matter. of course the very large supply and a huge number of users contributes to that stability but in the end it comes down to that demand. if some day that demand changes we see the price change too. we have already seen it crash to $0.9 and $0.85 before.

You said that's a weird question? Well I don't think it is if you're familiar with the way money work.

Think over this:
Why is the USD the global reserve currency? It is because it is stable and that stability comes from the fold that the currency is tied to.

So, the items a stablecoin is tied to affect its stability in a technical way.

pooya87

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Quote from: mk4 on April 16, 2020, 12:30:12 AM

~
Yeap. But take note that whoever is handling the supply of Tether can also print/burn supply as to keep the price at least close to $1. The $0.85-$0.9 prices occurred just because of the sudden spike of people selling their USDT, but as we see it quickly returned back to the $1 range when the Tether company interfered.

that could work mostly for the case where price is higher and they print more otherwise burning coins is not going to be that effective if people decided some coin is not worth $1 (lack of demand can not be covered by burning some coins that may not have even been in use).
BTW i think the big drop was during the time when Bitfinex was hacked and again when FBI was looking into their affairs and again when their banks shut down their accounts, and people were worried that the company and the exchange were going to shut down.

mk4

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Quote from: pooya87 on April 15, 2020, 11:13:22 PM

i don't think stability of a stable coin has that much to do with what it is backed by. in fact i believe that a stable coin is only as stable as the users of that coin perceive it. for example 1 Tether is only worth $1 as long users are not willing to buy/sell it at a higher or lower price. otherwise it doesn't matter. of course the very large supply and a huge number of users contributes to that stability but in the end it comes down to that demand. if some day that demand changes we see the price change too. we have already seen it crash to $0.9 and $0.85 before.

Yeap. But take note that whoever is handling the supply of Tether can also print/burn supply as to keep the price at least close to $1. The $0.85-$0.9 prices occurred just because of the sudden spike of people selling their USDT, but as we see it quickly returned back to the $1 range when the Tether company interfered.

pooya87

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that is a weird question! how can something that supposedly is pegged to something that inflates (ie. fiat) prevent inflation? if anything when these companies print more and more of their coin they are contributing to inflation.

Quote from: ?? on ??

2. Stablecoin is only as stable as asset/fiat which backed it. If the asset/fiat experience inflation, the stablecoin also got inflated.

i don't think stability of a stable coin has that much to do with what it is backed by. in fact i believe that a stable coin is only as stable as the users of that coin perceive it. for example 1 Tether is only worth $1 as long users are not willing to buy/sell it at a higher or lower price. otherwise it doesn't matter. of course the very large supply and a huge number of users contributes to that stability but in the end it comes down to that demand. if some day that demand changes we see the price change too. we have already seen it crash to $0.9 and $0.85 before.

slackovic

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Quote from: Wenbing on April 15, 2020, 02:42:52 PM

Quote from: slackovic on April 15, 2020, 01:21:22 PM

Quote from: ?? on ??

Quote from: Wenbing on April 14, 2020, 08:00:45 AM

Quote from: ?? on ??

Stable coin doesn't solve hyperinflation at all, because :
1. The stablecoin issuer or creator could add new more stablecoin supply anytime. It happens many times with Tether stablecoin
2. Stablecoin is only as stable as asset/fiat which backed it. If the asset/fiat experience inflation, the stablecoin also got inflated.

Thanks.

We have :
1.commodity pegging such as gold standard
2. Fiat pegging such as US dollar standard.
3. Cryro-pegging such as ethereum or bitcoin standard

What if we use god which is relatively stable to peg stablecoins, won't it be stable or decrease in rate of fluctuations?

While gold is relative stable, it doesn't solve 1st problem i mentioned. Besides, the transparency of token creator/issuer and whether the gold actual exist/not is questionable.

There are alternatives like DAI that is keeping it's price stable with algorithm. But those stablecoins too have their own problems.

How does that DAI keep its price stable through algorithm without being backed up by things with relative stability. Pls, kindly explain how that work.

It's a simple Google search to find that answer. Here, I "googled" that for you: https://www.google.com/search?q=how+does+dai+keep+it+value+stable

There are several articles that explain that, but you'll have to read carefully because it's not that simple.

Wenbing

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There is gold in volatility..

Quote from: slackovic on April 15, 2020, 01:21:22 PM

Quote from: ?? on ??

Quote from: Wenbing on April 14, 2020, 08:00:45 AM

Quote from: ?? on ??

Stable coin doesn't solve hyperinflation at all, because :
1. The stablecoin issuer or creator could add new more stablecoin supply anytime. It happens many times with Tether stablecoin
2. Stablecoin is only as stable as asset/fiat which backed it. If the asset/fiat experience inflation, the stablecoin also got inflated.

Thanks.

We have :
1.commodity pegging such as gold standard
2. Fiat pegging such as US dollar standard.
3. Cryro-pegging such as ethereum or bitcoin standard

What if we use god which is relatively stable to peg stablecoins, won't it be stable or decrease in rate of fluctuations?

While gold is relative stable, it doesn't solve 1st problem i mentioned. Besides, the transparency of token creator/issuer and whether the gold actual exist/not is questionable.

There are alternatives like DAI that is keeping it's price stable with algorithm. But those stablecoins too have their own problems.

How does that DAI keep its price stable through algorithm without being backed up by things with relative stability. Pls, kindly explain how that work.

slackovic

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Quote from: ?? on ??

Quote from: Wenbing on April 14, 2020, 08:00:45 AM

Quote from: ?? on ??

Stable coin doesn't solve hyperinflation at all, because :
1. The stablecoin issuer or creator could add new more stablecoin supply anytime. It happens many times with Tether stablecoin
2. Stablecoin is only as stable as asset/fiat which backed it. If the asset/fiat experience inflation, the stablecoin also got inflated.

Thanks.

We have :
1.commodity pegging such as gold standard
2. Fiat pegging such as US dollar standard.
3. Cryro-pegging such as ethereum or bitcoin standard

What if we use god which is relatively stable to peg stablecoins, won't it be stable or decrease in rate of fluctuations?

While gold is relative stable, it doesn't solve 1st problem i mentioned. Besides, the transparency of token creator/issuer and whether the gold actual exist/not is questionable.

This is the biggest problem not only with stablecoins pegged to gold but with every stablecoin that is pegged to something (fiat or precious metals). There are alternatives like DAI that is keeping it's price stable with algorithm. But those stablecoins too have their own problems.

bitmover

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Quote from: Wenbing on April 14, 2020, 01:55:38 AM

1. Can this new digital solution address volatility and stop economies from having hyperinflation?

1. Of course not. As mk4 said, stable coins are like printing fiat money. They will just speed up inflation.

Quote from: Wenbing on April 14, 2020, 01:55:38 AM

Stablecoin exists to address volatility associated with bitcoin and altcoins.
...
4. What's bitcoin effort in trying to solve volatility problem?

They do not exist for that reason. Volatility is not a problem to be addressed and solved. It is just a consequence of the uncertainty of the future of cryptocurrency assets. As long as this future remains unknown, as being completely forgotten or mass adopted, the price will be very volatile.

You are thinking everythhing the wrong way Wink

mk4

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Quote from: Wenbing on April 14, 2020, 08:00:45 AM

What if we use god which is relatively stable to peg stablecoins, won't it be stable or decrease in rate of fluctuations?

We already have a cryptocurrency that's supposedly pagged to a gram of gold named Digix Gold Token(DGX). It literally does nothing to decrease the rate of volatility because what the markets need is liquidity, not new trading pairs.

Topic: STABLECOINS CAN STOP HYPERINFLATION? (Read 398 times)