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

Thank you.



Properly backed stable coins are not much different from the assets used for backing them (no big relation to Bitcoin).
They are usually different from Bitcoin and altcoins. They are usually backed by fiat currencies where the supply is not finite, while Bitcoin supply is finite and rather small.
This means that the value of fiat currencies usually decreases over time (inflation) giving the impression the value of Bitcoin is rising.

What I said was that if only properly backed coins would be used to buy Bitcoin its volatility could be smaller.
But the current high volatility is also caused by the fact Bitcoin (and altcoins too) is a young asset and its markets/exchanges are not properly regulated.



US Dollar is far from being stable. What tricks you is the point of reference. Remember that ancient people thought that Earth sits and Sun is travelling around it.
US dollar is now about 20 times weaker than it was in 1800. See on this website the Year/Dollar Value table on that page. Or search for other ones, this was just a search result, I don't know how accurate it is, but you'll get similar results.



In theory an USD backed stable coin has always the value of 1$, so it can't be more or less stable than dollar.
In reality some small fluctuations happen, but I think that the reasons are fees, supply issues and maybe bigger problems. I tend to avoid USD related stable coins because of this. They don't bring me any benefit if I don't arbitrage.



Always keep this in mind, whether you talk about inflation, volatility, halving or speculation.

Stablecoins are valued at 1 USD, and SHOULD be backed 1:1 with real US Dollars, but we really can't prove that it's actually really backed 1:1.

As you can see on crypto price sites like coinmarketcap, stablecoins are pegged to the USD whereas bitcoin and altcoins are just priced through supply and demand, hence why bitcoin/altcoins can rise and fall as much as the market wants, whereas stablecoins are almost always $1.

You made a very cogent point here that all should consider keenly:
1. Do you Stablecoins backed by other assets is not different from altcoins and bitcoin in terms of volatilities?

2. Why is the US dollar a fiat currency stable overtime? I believe one of the reasons is due to the backing of the gold standard.

3. Don't you feel that a crytocurrencies backed by fiat currency like USD will be more stable than dollars?

Although, the market force is a powerful market trend force.

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You mean stablecoins might help to speed inflation? Well, still pondering over it. Well stability and inflation can not take place simultaneously. The equilibrium point of deflation and inflation of coins is stability.

My observation is what now make stablecoins different from altcoins and bitcoin?

[moderator's note: consecutive posts merged]

1. No. If anything, stablecoins might actually be helping speed up inflation. Because we don't even know for sure if all stablecoins currently exists are actually backed up 1:1 with the US Dollar. Some of these stablecoin companies(like Bitfinex) might actually be insolvent and are just printing out Tethers for the sake of it.

2-3. Don't expect stablecoins to help price stability by much. If anything, stablecoins just provide more market liquidity, but that itself wouldn't make bitcoin stable. We simply need more buyers and sellers, or time in general.

4. Nothing. Because Bitcoin is a protocol not a living entity. Stability will come with time. You really don't expect an 10-11 year old asset to be stable; especially in an unregulated market where manipulation occurs and people can simply dump huge amounts at will. That would simply be very realistic.

First of all it's not inflation. Inflation would mean the value drops, which is not the case for Bitcoin and such.


Keep in mind that not all stable coins are the same. They are pegged to different "values" and they should be backed by an equivalent reserve of those "values".

But not all do this, most notable example is the well-known USDT/Tether which never allowed a trusted 3rd party make a proper audit, so it's safe to assume that their coin is not actually backed. And here the problems come.
If all the stable coins would be backed properly, they would not change anything at all in the price evolution of the main coins (the world would be the same - with or without them, they'd just make the arbitrage and other transactions faster).
But the not-backed stable coins are dangerous. They are "made of thin air" and transfer value into the hands of the issuer by "stealing" value from the actual coins (I'm not sure how to word it better).

Stablecoin exists to address volatility associated with bitcoin and altcoins.

We have collaterised coins which are in form of crypto-pegged coins, commodity-pegged coins and fiat-pegged coins with the goal of bringing stability to crytocurrencies.

My question are:

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

2. Which of the collaterization do you think will be feasible in achieving stability?

3. Which coins have achieved this feat so far?

4. What's bitcoin effort in trying to solve volatility problem?

Kindly, share your thought on this important subject. Thanks