Topic: The main harm of existing “Stablecoins” this is a pyramid scheme - page 2. (Read 354 times)
Stablecoins I think are very different from fiat, which tends to have quite high inflation due to a stable valuation free of volatility from fiat currencies, while price stability is supported by other reserve assets, but if we look at TerraUSD and Luna which are in free fall and horrendous the crypto market at this time as stablecoins that experience significant inflation unlike others...
Stablecoins need a stable demand and supply model to function and remain useful.
There are times when there has been a big divergence between the price of a stablecoin and fiat but afaik this could be mitigated by developers.buying and selling them based on dollar exchanges and having collateral for them.
I don't think inflation is considered a problem internally by economists (it's just an acknowledgement to look like they care when prices of things go up).
There are times when there has been a big divergence between the price of a stablecoin and fiat but afaik this could be mitigated by developers.buying and selling them based on dollar exchanges and having collateral for them.
I don't think inflation is considered a problem internally by economists (it's just an acknowledgement to look like they care when prices of things go up).
Stablecoins pegged to sustainable fiat currencies don't have this issue. Theoretically you could make a stablecoin pegged to anything of value as long as the underlying asset exists. Inflation doesn't really factor into stablecoins unless you get to a point where you need to increase the supply of coin because of decreased purchasing power with high inflation (granted the coin is pegged to a fiat currency).
Inflation is a problem if the purchasing power of any individual goes down by artificially increasing the money supply.
The total capitalization of stablecoins has exceeded $180 billion and further growth is endless.
https://coincodex.com/cryptocurrencies/sector/stablecoins/
Because currently developers can create decentralized stablecoin types that are almost inaccessible to government supervision where fiat stability is precisely the result of government policies. As a result, a portion of the stablecoin's capitalization is not in the fiat reserve records.https://coincodex.com/cryptocurrencies/sector/stablecoins/
because more toilet paper money needs to be printed to back the Stablecoins in circulation.
Decentralization is trust without collateral. When you believe in it, then you must also consider backed assets is valuable even if it's toilet paper. My issue with Stablecoins are the validity of the statement that $1 = 1 Stablecoin 
It is almost impossible to trace the dollars that are supposedly backing the value of the tokens.
If that was the case, then I think Stablecoins are actually helping inflation ...because more toilet paper money needs to be printed to back the Stablecoins in circulation.
It is almost impossible to trace the dollars that are supposedly backing the value of the tokens. If that was the case, then I think Stablecoins are actually helping inflation ...because more toilet paper money needs to be printed to back the Stablecoins in circulation.
That's right, stablecoins are toilet paper, but it also devalues Fiat itself.
My issue with Stablecoins are the validity of the statement that $1 = 1 Stablecoin It is almost impossible to trace the dollars that are supposedly backing the value of the tokens.
If that was the case, then I think Stablecoins are actually helping inflation ...because more toilet paper money needs to be printed to back the Stablecoins in circulation.
It is almost impossible to trace the dollars that are supposedly backing the value of the tokens. If that was the case, then I think Stablecoins are actually helping inflation ...because more toilet paper money needs to be printed to back the Stablecoins in circulation.
Any stable linked to fiat automatically increases inflation by the amount of its issue.
Do you mean anyone can simply create a stable coin without a backing equivalent asset?
Nope, regulations regulate how to issue stable coins especially fiat or other tangible commodities reserves where it cannot be withdrawn as long as its stable coins are in circulation (unless they are renewed when obsolete), and issuers must report their reserves every period. Then coin-stable inflation occurs as fiat represents it.
https://coincodex.com/cryptocurrencies/sector/stablecoins/
April 14, 2022, 07:24:26 AM
The main purpose of stablecoins is not to act like a store of value,but to make cryptocurrency trading easier and more convenient.The stablecoins aren't competitors of Bitcoin and the big altcoins.They are supposed to be a supplement of the cryptocurrency trading ecosystem.
It depends on what we called stable coin, the ones that are backed by gold and have gold price and the ones that are backed by bitcoin and have bitcoin price can be said to be deflationary. They are also stable coins because their price is stable with the price of the asset they are backed with just like wBTC that is pegged with bitcoin or PaxGold that is pegged with gold just in my previous explanation. But about the ones that people most commonly call stable coin because they are pegged with fiat, I can assume that they are inflationary but not directly but indirectly as the fiat they are backed with are declining in price, they too are reducing in value. 
April 14, 2022, 07:04:38 AM
The main harm of existing “Stablecoins” is not controlled emission, but, accordingly, inflation.
Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?
Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?
Inflation is mostly caused by the controlled emission,so your statement seems kinda meaningless to me.
I agree that the main problem of the stablecoins is the "fractional reserve banking",which can potentially create value out of thin air.Nobody knows how big the Tether reserve actually is.This applies to all the other stablecoins as well.
The main purpose of stablecoins is not to act like a store of value,but to make cryptocurrency trading easier and more convenient.The stablecoins aren't competitors of Bitcoin and the big altcoins.They are supposed to be a supplement of the cryptocurrency trading ecosystem.
April 14, 2022, 06:47:07 AM
Personally the definition of stablecoins is a database value that stable the value of your balance within central platforms and therefore you should think about it like this basically, allowing withdrawal from platform, conversion between Cexs/Dexs and others in a good idea but ultimately stablecoins are limited to trading .
Thus, they are not directly linked to inflation ( Inflection increase per year/month while trading changes in short-term,) but the promises of the platform that keeps its stability.
Therefore, it is an intermediate stage in trading, instead of turning your profits to cash and then its deposit in the future, comes down to provide speed and low fees but otherwise, they are not "fundamental value" outside the platforms.
Thus, they are not directly linked to inflation ( Inflection increase per year/month while trading changes in short-term,) but the promises of the platform that keeps its stability.
Therefore, it is an intermediate stage in trading, instead of turning your profits to cash and then its deposit in the future, comes down to provide speed and low fees but otherwise, they are not "fundamental value" outside the platforms.
April 14, 2022, 05:02:29 AM
And how do they differ from a regular debit card?
While stable coins may be used like "a regular debit card", their actual real use is different:
* unlike for debit card, stable coins can be used without KYC (of course, in less and less situations, unfortunately)
* stable coins can be used for transferring value fast between different platforms. This happens (is settled, final) much faster than debit cards.
Stablecoins initial use was for traders, maybe even especially for arbitrage trading.
Nowadays many use it against Bitcoin price drops or other use cases adapted to their needs, especially no-KYC needs.
If you see stablecoins "like a debit card" and "like fiat" inflation makes fiat value drop, it can be also seen as inflating Bitcoin. That part cannot really be changed...
April 14, 2022, 04:52:27 AM
The main harm of existing “Stablecoins" is uncontrolled inflation.
Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?
stable coins will not increase or decrease in value. so saving it will not make our assets go up. In fact, its value will decrease if it is aligned with the current inflation rate. Suppose we buy goods for the future, of course, the price of the goods will rise. therefore it all depends on our goal of using stable coins, will be profitable and will be detrimental. traders need stable coins to trade, and this helps a lotToday, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?
For example, BUSD or USDT is proven safe to store assets,
obviously it's back again as you said that it depends on how we use stable coins
And how do they differ from a regular debit card?
April 14, 2022, 04:24:20 AM
The main harm of existing “Stablecoins" is uncontrolled inflation.
Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?
stable coins will not increase or decrease in value. so saving it will not make our assets go up. In fact, its value will decrease if it is aligned with the current inflation rate. Suppose we buy goods for the future, of course, the price of the goods will rise. therefore it all depends on our goal of using stable coins, will be profitable and will be detrimental. traders need stable coins to trade, and this helps a lotToday, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?
For example, BUSD or USDT is proven safe to store assets,
obviously it's back again as you said that it depends on how we use stable coins
April 14, 2022, 04:19:31 AM
The main harm of existing “Stablecoins" is uncontrolled inflation.
Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?
Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?
It widely depends.
If a stablecoin is properly and fully backed by the "thing" it replaces - usually USD, then there should not be artificial inflation.
The problem starts when stablecoins are not baked. And here there are at least two problems: those using the not-backed stablecoin face themselves the risk of finding themselves holding a bag of coins with no value (for example many gold-pegged stablecoin projects were for example not backed and they're long gone), and yes, the other problem is that it can cause artificial inflation. Still, maybe the oldest stablecoin and surely the most well-known one, USDT, has a long history of not being properly backed, yet people still accept it and use it, helping the crypto market being (somewhat?) artificially inflated.
In theory, one should DYOR and avoid the fishy ones. Sadly, the reality shows that this doesn't happen.
The only good news seems to be that at least the newcomers in the stablecoins "market" seem to have proper backing (or at least most of them).
April 14, 2022, 02:56:31 AM
The main harm of existing “Stablecoins" is uncontrolled inflation.
Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?
stable coins will not increase or decrease in value. so saving it will not make our assets go up. In fact, its value will decrease if it is aligned with the current inflation rate. Suppose we buy goods for the future, of course, the price of the goods will rise. therefore it all depends on our goal of using stable coins, will be profitable and will be detrimental. traders need stable coins to trade, and this helps a lot Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?
April 14, 2022, 12:24:49 AM
The main harm of existing “Stablecoins" is uncontrolled inflation.
Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?
Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?
If we assume that stablecoins are fully backed, then there won't be any inflation since the stablecoin replaces the money that backs it.
April 13, 2022, 08:51:17 PM
Stable coins is uncontrolled inflation? Yes and No.
But the government are the ones that are controlling the value of fiat, they devalue it when necessary. If stable coin is backed by or pegged with fiat, that means its value in price is equivalent to the price of fiat, just like USDT (stable coin) and USD (fiat). If fiat is devalued, then automatically stable coins are devalued.
But some stable coins are pegged with unstable coins just like wBTC that is pegged with bitcoin, or just like some cryptocurrencies like paxgold are pegged with gold price, those are not inflationary coins.
You're wrong. Where did the capitalization of these unstable coins come from? The amount of money spent on the acquisition remained in circulation and the capitalization of these coins was added to it. But the government are the ones that are controlling the value of fiat, they devalue it when necessary. If stable coin is backed by or pegged with fiat, that means its value in price is equivalent to the price of fiat, just like USDT (stable coin) and USD (fiat). If fiat is devalued, then automatically stable coins are devalued.
But some stable coins are pegged with unstable coins just like wBTC that is pegged with bitcoin, or just like some cryptocurrencies like paxgold are pegged with gold price, those are not inflationary coins.
The main harm of existing “Stablecoins" is uncontrolled inflation.
Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?
Stablecoins can’t address the inflation issues, they just follow it and so far USDT and other stablecoins remain stable despite of the inflation. You cannot just create or print stablecoins, it requires a lot of works so technically the supply is not that big but still they are able to maintain its value. There are some country who are using USDT already because of the high inflation on their country, this serves as an alternative for them. Cryptocurrency can address the inflation, or at least gives a higher value compare to fiat money but you must consider volatility first before trying any coins/tokens. Today, anyone can create a demon of control-print their “Stablecoins” thereby increasing the total issue of the financial bubble, what do you think?
There are claims of residents in high inflation regions like turkey, argentina and venezuela using stablecoins like tether (which are pegged to the US dollar).
As a means of protecting their wealth against high(er) inflation than the united states has.
Stablecoins being a tiny sliver of the global economy, it is difficult to imagine a scenario where stablecoin markets represent a significant chunk of a critical asset bubble.
Tether is the largest and most famous stablecoin with a market cap of $82 billion. A crash there won't rival derivative asset bubbles like the subprime mortgage CDO bubble of 2008.
Bitcoin's market cap at $1 trillion at most, is still a small fraction of the $20 trillion dollar US economy.
I see people trying to engineer a scenario where bitcoin and crypto represent a dire threat to the global economy. Earlier this year, nobel prize winning economist, Paul Krugman attempted it.
As a means of protecting their wealth against high(er) inflation than the united states has.
Stablecoins being a tiny sliver of the global economy, it is difficult to imagine a scenario where stablecoin markets represent a significant chunk of a critical asset bubble.
Tether is the largest and most famous stablecoin with a market cap of $82 billion. A crash there won't rival derivative asset bubbles like the subprime mortgage CDO bubble of 2008.
Bitcoin's market cap at $1 trillion at most, is still a small fraction of the $20 trillion dollar US economy.
I see people trying to engineer a scenario where bitcoin and crypto represent a dire threat to the global economy. Earlier this year, nobel prize winning economist, Paul Krugman attempted it.
Any stable linked to fiat automatically increases inflation by the amount of its issue.
Do you mean anyone can simply create a stable coin without a backing equivalent asset?
Nope, regulations regulate how to issue stable coins especially fiat or other tangible commodities reserves where it cannot be withdrawn as long as its stable coins are in circulation (unless they are renewed when obsolete), and issuers must report their reserves every period. Then coin-stable inflation occurs as fiat represents it.
Stablecoins need a stable demand and supply model to function and remain useful.
There are times when there has been a big divergence between the price of a stablecoin and fiat but afaik this could be mitigated by developers.buying and selling them based on dollar exchanges and having collateral for them.
I don't think inflation is considered a problem internally by economists (it's just an acknowledgement to look like they care when prices of things go up).
There are times when there has been a big divergence between the price of a stablecoin and fiat but afaik this could be mitigated by developers.buying and selling them based on dollar exchanges and having collateral for them.
I don't think inflation is considered a problem internally by economists (it's just an acknowledgement to look like they care when prices of things go up).
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