THE ECONOMY

wild greens

Well-known member
Yeah I'm not sure where to stand about whether crypto in general should be considered a hedge against inflation. Are you concerned about regulators cracking down especially on monero?
Not really as there is always another one to jump to, but i'm just grafting the system for a couple of extra quid anyway. If it was my "job" i might be concerned

Bitcoin is the big inflation hedge now, whether you like it or not, its why the big banks have ploughed money into it. Its the new gold! Though at least gold is a good conductor
 

IdleRich

IdleRich
Apparently there are many different kinds, but in general a stablecoin is a crypto asset that is pegged to a fixed value, such as the dollar. This may involve having a reserve of dollars to back up a supply of stablecoins, which would be privately issued currencies. Circle, which issues USDC, and Tether, which issues USDT, are the leading stablecoins with dollar reserves, whereas DAI is an “algorithmic stablecoin” not backed up by a dollar supply, but instead by a vault of various crypto assets that users can deposit in order to mint DAI.

DAI is governed by MakerDAO, a horizontal organization, whereas Circle and Tether are more traditional companies, I believe.
People say Tether is shady and can’t back up their supply.

The head of the Securities and Exchange Commission insists that stablecoins are securities, which I disagree with personally. You don’t acquire stablecoins with the expectation that they will appreciate. You acquire them precisely because they are stable.
Or as stable as the thing they are pegged to at any rate (no pun intended).

What a fascinating and weird world where a cryptocurrency is backed by reserves of dollars which in turn are backed by reserves of... nothing.

But what is the point of a coun backed by and pegged to the dollar? I guess the idea is that you gain anonymity for transactions but otherwise are removed from any of the risks or rewards associated with cryptocurrencies - you do not protect yourself from any financial crash etc and you have no chance of making money from speculation.

Is it entirely about anonymity or is there something I'm missing?
 

Clinamenic

θερμοδυναμικός καπιταλιστής
Or as stable as the thing they are pegged to at any rate (no pun intended).

What a fascinating and weird world where a cryptocurrency is backed by reserves of dollars which in turn are backed by reserves of... nothing.

But what is the point of a coun backed by and pegged to the dollar? I guess the idea is that you gain anonymity for transactions but otherwise are removed from any of the risks or rewards associated with cryptocurrencies - you do not protect yourself from any financial crash etc and you have no chance of making money from speculation.

Is it entirely about anonymity or is there something I'm missing?
Re:backing a stablecoin with dollars, I think it’s just a way of gaining people’s trust, and it also may be a way of curbing the rate that these issuers issue stablecoins. Not sure how else tha issuance can be curbed, or even if dollar-backing would suffice.

Certain blockchains are more built around anonymity than others. Ethereum, and Bitcoin even now, have had domain name services built upon them, so if I wanted to I could name my long hexadecimal ETH address something like “Stan.eth” and remove the anonymity.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
Or as stable as the thing they are pegged to at any rate (no pun intended).

What a fascinating and weird world where a cryptocurrency is backed by reserves of dollars which in turn are backed by reserves of... nothing.

But what is the point of a coun backed by and pegged to the dollar? I guess the idea is that you gain anonymity for transactions but otherwise are removed from any of the risks or rewards associated with cryptocurrencies - you do not protect yourself from any financial crash etc and you have no chance of making money from speculation.

Is it entirely about anonymity or is there something I'm missing?
Also just blockchain is a way faster means of payment settlement, like orders of magnitude faster than bank wires, which can take multiple days. Crypto can take anywhere from second to minutes to tens of minutes.
 

Clinamenic

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With blockchain, stimulus checks wouldn’t take months to reach their recipients.
 

Clinamenic

θερμοδυναμικός καπιταλιστής
Also the APY rates on stablecoin lending is quite high right now, largely I suspect because of the perceived risk of it all. The platform I use offers 10% APY on USDC, as compared to the 0.03% offered by the major savings accounts in traditional commercial banks. I expect these rates to fall, but not by three orders of magnitude.
 

IdleRich

IdleRich
Also just blockchain is a way faster means of payment settlement, like orders of magnitude faster than bank wires, which can take multiple days. Crypto can take anywhere from second to minutes to tens of minutes.
But why do bank transfers take so long? I think they could be instant for the customer of the bank wanted them to be. They create a period of limbo in which the money is in neither the sender or receiver account - it is earning interest for the transferring entity. Add this together for every transaction and it makes a lot of money.

Hawala bank transfers are basically instant so why not wire transfers?
 

Clinamenic

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Don’t have a good answer, my only guess is accounting complications involved in switching funds between distinct ledgers, ledgers not created for a digital economy. Also there may be some way to profit from this friction, which would make more sense as to why things haven’t improved.

I remember hearing about efforts to expedite Fed wire or maybe just bank wires in general, involving placing new fiber optic cables or some such infrastructure. But yeah ultimately I don’t know why it takes so long.
 

Clinamenic

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But a transaction taking three days to settle is virtually unheard of in crypto, save for anomalies perhaps, transactions stuck in mempool limbo for whatever reason.
 

Clinamenic

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The real profit is in working with the market, lubricating the existing momentum, I.e. selling the lubricant.
 

Clinamenic

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I trust the old boys see this and have been planning accordingly, re: blockchain.

I know Wells Fargo is contracting Paxos for a bespoke, permissioned blockchain.
 

Clinamenic

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Paxos actually has a crypto asset pegged to gold, with gold reserves and everything apparently.
 

Slothrop

Tight but Polite
Don’t have a good answer, my only guess is accounting complications involved in switching funds between distinct ledgers, ledgers not created for a digital economy. Also there may be some way to profit from this friction, which would make more sense as to why things haven’t improved.

I remember hearing about efforts to expedite Fed wire or maybe just bank wires in general, involving placing new fiber optic cables or some such infrastructure. But yeah ultimately I don’t know why it takes so long.

AIUI it's mostly just the historic way that things have been set up, coupled with the fact that, as Rich suggests, it taking a long time is fairly profitable for the banks, giving them relatively little incentive to improve it.

There's no de facto reason that it shouldn't be faster. In fact, it ought to be significantly quicker and cheaper than crypto, because it isn't having to do a whole load of crypto numbercrunching to work around the need for a single trusted source of truth.
 

Clinamenic

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Maybe by imposing fees on transactions that leave the ledger of the bank of the sender?
 

Clinamenic

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But I would imagine it would take longer if all the transaction verification duty was consolidated into the banks nodes, as it seems more efficient to have more nodes, which may not be a scalable solution for a single party. I.e a bank may not be willing to single-handedly run 12,000 nodes, or however many are in the Bitcoin network.
 
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