> Crypto-as-money is still young. We have a lot to do. Do you remember Napster? Tether is kinda like Napster – it's taking off, people love it, it's a little sketchy, and it's probably not the design that will last. We don't want to make the equivalent of Kazaa – another blip in the history that ultimately doesn't ultimately work out. The challenge is to build a platform that's as robust as BitTorrent and as great to use as Spotify and Netflix.
For something on an about page, this copy draws some extremely frank comparisons.
> If users all have to go through a KYC process, this significantly limits the viability of the token to permit free movement of money across borders.
KYC processes are, essentially, the law. Governments go out of their way to do this to cut down on financial crime. Regardless of whether you believe these laws are useful or just, I find it difficult to believe they'll have any success trying to work around these laws. Governments (in general) do not like it when folks try to create loopholes: I wouldn't bet on a project whose stated goal was to avoid complying with the law.
They do not apply to all financial interactions. Fortunately they have not yet passed KYC laws that apply to many types of peer-to-peer financial activity, as the ones in force were designed for an era where electronic transactions were only intermediated by large trusted third parties, and largely exempt direct p2p transactions.
So this sudden opportunity to legally engage in financial interactions without the encumberance of 40 years of accumulated AML/KYC laws that has arrived with the emergence of decentralized finance offers the opportunity to reverse the trend toward governments, at the behest of international organizations like the FATF, increasingly resorting to the warrantless dragnet surveillance of finance approach to combating crime, i.e. Total Information Awareness applied to private financial interactions.
Similar to how the internet forced governments to back off on censorship laws, cryptocurrency has the potential to force the political class to rethink current financial crime laws and liberalize people's access to money. It has the potential to lead to criminal laws being limited to those that respect traditional due process and privacy rights, and the principles of freedom of association and presumption of innocence that free societies depend on.
> Similar to how the internet forced governments to back off on censorship laws, cryptocurrency has the potential to force the political class to rethink current financial crime laws and liberalize people's access to money.
Or it has the potential to force the political class to rethink current financial crime laws, and tighten up P2P loopholes cryptoenthusiasts are exploiting to make their product more attractive to ransomware developers, to the detriment of everyone else who just wants to avoid photocopying their passport every time they send money to their friends. I wonder which is more likely.
The internet also created new classes of crime. It doesn't mean we're worse off for liberalizing access to telecommunicatiom.
As for which I think is more likely, I think it's liberalization of finance and the retreat of the surveillance state. The new DeFi system is so much more efficient than the traditional financial system and the restrictions it's straddled with, that economic value will flow to it, and economic interests will trump the institutional inertia of the up-to-now steadily advancing surveillance state.
And it's fortunate too. If not for the sudden splash of financial liberalization brought about by cryptocurrency, the frog in the pot would have slowly been boiled by the creeping centralization of finance that has occurred over the last 40 years.
The last 40 years has seen regulatory institutions increase the restrictions they impose, the staff they employ, and the budgets they oversee, while becoming increasingly intertwined with the corporate giants they are meant to regulate through campaign contributions, political lobbying and the revolving door that exists between them and the private sector.
> Similar to how the internet forced governments to back off on censorship laws, cryptocurrency has the potential to force the political class to rethink current financial crime laws and liberalize people's access to money.
To do this the currency needs to win in a battle against every government without being blocked or made illegal. It doesn't matter what you think about KYC laws: trying to subvert them means taking on governments, and that is almost never a winning strategy. Especially when your strategy is "build a technical system that outfoxes the government by strong-arming them into my way of thinking".
One example is that obscenity laws stopped being enforced in some states as authorities gave up on trying to stop internet pornography.
That's maybe not the best example for making a pro-liberalization case, as pornography isn't exactly a public good, but it's what comes to mind as a clear case of the legal strategy employed by the state changing due to new technology.
totally agree.. once my account on Revolut was blocked, without explaining why, and was kept locked for 6-7 months. during these months they asked all sorts of documents, and then they closed the account and the rest of the money which was on that account were sent to some strangers :) and again, without any explanations. now, copies of my documents are sitting somewhere on their servers waiting to be hacked and distributed to criminals, who will use them to pass through KYC :)
I had a similar experience as a false positive for fraud, it was enormously frustrating and time consuming to clear my name, often having to be very adversarial and threaten legal action to the companies, before they finally cleared me for what turned out to be a mistake on their end.
Yeah, getting your details hacked is the scariest part. With these documents, criminals can breeze through any other KYC in an instant, pretending to be you.
Another thing with KYC is they are above all privacy laws, including GDPR. For example, services are not allowed to delete your private account details even if you close your account, for 5 years or more. Also, as an account holder, you are not allowed to know who your KYC details were shared with the government / law enforcement, and why. You are not even allowed to view the warrant (should there be one).
Don't you know the SV aristocracy are above the law?
We can debate the law, we should, not following a law is also a choice.
But disrupting laws as an ideology is eroding our ability to engage in meaningful social exchanges. The pipe dream that technology can absolve humanity from unavoidable need for trust and faith is perhaps improving our material situation in the short term. But human psychology is not easily augmented by technology. Deep down, to face the uncertainties and the inevitable lack of full knowledge of reality, we strive for the safety of faith and trust.
Trying to eliminate it will push a massive amount of humans to reactionary action.
And when humans can't get safety out of trust, they get it using force and control.
The art is to balance these, not to imagine you can eliminate it.
BTW: I'm far from being religious. My idea of faith is more abstract than the religious one.
It's worse than that: every reservoir of trust represents a resource that fraudsters can profit from destroying, like a rainforest. It's an opportunity to make money for themselves while gradually wearing down the rest of society and making it worse for everyone else. Just as the deliberate destruction of trust in politics leads to people storming the Capitol.
When it removes the peg to the dollar, how it's supposed to be stabilized? "bunch of random collateral" isn't quite convincing. How are people going to trust that the collateral, like tokenized bonds, are actually valuable? I'm not going to trust such a system. Money based on trust is dead.
The only purpose of this currency is to enrich those who invented it.
> The only purpose of this currency is to enrich those who invented it.
As is tradition in crypto. It's kind of implicit.
[edit] I mean, think about this rationally. You're creating a new token, that doesn't have revenue, a business model, or any way of generating income. And yet it is "100% asset backed, and funded by top Silicon Valley investors."
Those investors aren't in it for their health. They don't care about decentralization and trustless whatever. They want to make an ROI.
How can you make an honest ROI if you don't have income?
Precisely. Provide stability in exchange of absorbing the risks from the underlying assets. It's what every bank could do, even without fractional reserve.
I've had my share of discussions with arcticbull, it's amazing how smart he can be when he wants and how clueless he makes himself to be when it comes to acknowledging the upside of crypto projects.
It's always a pleasure though! :) I certainly learn a lot from y'all.
I should say, I freely acknowledge I don't have all the answers - clueless in some cases even, to borrow a turn of phrase. I find crypto fascinating, like many folks, from a technical perspective. I remain unconvinced about it's practical real-world applications.
To back you up somewhat with a personal anecdote... I've been working in the blockchain World for about 8 years across crypto and enterprise blockchain as an engineer, researcher and more recently a product manager, and and have come to the conclusion that there are not really very many practical applications for crypto or enterprise blockchain.
For crypto, other than censorship resistance - which most people don't actually care about because they are lucky enough not to need it - it doesn't really offer anything useful. Most crypto projects are Rube Goldberg machines whereby the operators of these companies are re-hashing all the same things our ancestors did with money. Of course they are doing well at the moment because it's morphed into a get rich quick scheme. If there was no easy money to be made there would be little interest in it, just like there was back in 2010 when I started looking at Bitcoin.
Enterprise blockchain struggles because there's no actual need for blockchain elements like chains of provenance and smart contracts if the participants are fully identified and already have business relationships. "Blockchain" is a direct substitute for trusted third parties and good legal agreements and should only ever be used in circumstances where all other options are exhausted because the technology comes with so many bad trade-offs. Doesn't scale, very complicated, difficult to manage upgrades and versions, customers find it hard to understand, etc...
> I remain unconvinced about it's practical real-world applications.
When your idea of "real-world" is one where all people have access to stable, robust and functional institutions, it's no surprise that you don't see the necessity of alternatives.
Consider it a privilege. And I don't mean it in a derogatory way.
The backing assets appear to be other stablecoins. I wonder what kind of interest they can make that 1) isnt incredibly risky, and 2) is legal in the US where they are based.
Buy US treasuries? Those rates are still positive (0.09% - 1.66%). Since the capital is essentially free even if you get a blended rate of return of say 0.2% that is still real money. As an example USDC has $5.1 billion dollars in outstanding tokens issued that's $10 million a year at 0.2% just to sit on it.
Sort of; that has a risk you haven't accounted for: borrowing long-term and lending short-term (or rather, no fixed term). This is the same kind of risk that absolutely savaged WeWork.
For instance, if we take your 0.2% blended rate estimate for what you can get for your capital, that's still a real yield of -1.8% accounting for inflation. Luckily that 2% inflation loss is born by your token holders, not you, however that creates a real incentive to exit the tokens once interest rates rise.
Let's say interest rates rise to 5% due to a financial recovery - back to where they were in 2010. Now, not only have your token holders lost 2% value for each year you've carried the T-bills, you have to discount the notes by 3.375% (vs the current market 1.625%) to liquidate them should your token holders decide to redeem and move into bonds themselves.
To liquidate them you have to pay the difference in coupon rates, so a mark to market loss of $172M. If we take your 0.2% blended rate as an offset, even over a 5 year window, that still represents a net loss of $122M.
Borrowing long and lending short works until it doesn't, then you can ask Mr. Neumann what happens.
> How can you make an honest ROI if you don't have income?
This seems like a very curious view of the world to me. Do you believe that people who buy houses and sell them at a profit 20 years later are dishonest?
If you're an institutional investor in real estate, you can use real estate to generate a nice steady income, via rental. People who aren't parking capital or laundering money tend not to invest in houses to keep them empty.
I think the OP meant speculative. Most jobs create value, some don't. Some people just have a hard time digesting and wrapping their heads around making money without creating actual value.
Indeed - in isolation home price increase tends to match inflation (as in, no real dollar returns). In areas where it goes up, it tends to be due to external influences such as city councils preventing new development.
On one hand, yes, you are right. This "it's turtles all the way down" approach regarding valuation of tokenized assets is a huge source of systemic risk and those that want to be able to get greenbacks will be better off by using centralized stable tokens (like Circle's USDC or STASIS' EURS)
On the other hand, any project that can be transparent about its reserves (whether though "smart contracts" or plain old armies of bean counters writing actual compliant reports to Uncle Sam) is welcome by my book. Anything that can take the influence and dominance from Tether in the crypto market should be brought to the table and considered for analysis.
> The only purpose of this currency is to enrich those who invented it.
Isn't that exactly what's happening with the existing relationship between governments, their central banks and the financial elites?
I'm not a fan of Reserve either, much less of this Silicon Valley idea of governance, but as long as they they make good on their deals and make their money by providing stability in exchange of absorbing risks, I don't see anything immoral or unethical about the fact that private individuals and organizations can go on to try to create an alternative to central banks.
Remove the unconstrained supply of Mickey Mouse money (Tether) and eliminate wash trading, and you will watch Bitcoin descend into the abyss rather quickly.
Personally, I see these issues purely as “buy the dip” investment opportunities. For many speculative investors, the crazy volatility from factors like these is what makes crypto attractive. I see a deeply undervalued long-term value proposition for cryptocurrency, where the big risks for today involve the minefield of manipulation issues that have to be survived to get to the other side where the assets appreciate hugely due to a true valuation mechanism, no longer wanton speculation.
In other words, I’ll be happy if bitcoin crashes from Tether (I believe it will, probably to well under $20,000) - that is nothing more than a huge buying opportunity.
There is a huge moral issue here. You have a company that is manipulating the market like crazy convincing people to put more and more of their savings in crypto, all of it to be taken away.
This asymmetry in information alone should be reason to have them eliminated from the market as soon as possible.
Totally agree. Getting rid of Tether and holding them responsible sounds great.
But that has nothing to do with the long-term valuation of cryptocurrency. The part I object to, which is what many of the earlier comments are trying to say, is some version of “Tether & wash trading is bad, therefore bitcoin is nothing but hype / fake scams.”
Yeah, yeah, I get it. No one can really know the true price of BTC. It's all speculation. Nothing to back it up... what else do you have?
Understand this: there is a large number of people that will keep working with BTC (and crypto) regardless of price and current market conditions. There is a large number of people that don't care about the price. People will keep building things on crypto, regardless of price and it will become more and more of an alternative to existing financial/economical systems.
Speculation? You can look at the raw market data right here and see several things that should make any critically minded person go 'hmmm': https://coinmarketcap.com/currencies/tether/
How can Tether have a daily trading volume of almost 100 bln on a supply of 'just' 24 bln? Seems rather obvious that the vast majority of crypto trades are done by HFT algos and not people (or worse, that the actual supply of Tether is much higher than the reported supply).
You can't deny that Tether is a very essential component in the crypto markets. It is also an unregulated, unaudited private entity operating outside western jurisdictions, with a long history of controversies: https://www.kalzumeus.com/2019/10/28/tether-and-bitfinex/
Hardly the group you'd want managing a global currency system.
You do know what you are saying may be new to a few naive or ignorant newcomers, but that is already priced in by any reasonable person involved in the space, right? [0]
Yes, I completely agree what Tether is doing is criminal and that they will likely be responsible for the next crash.
The question is: so what? The important thing about crypto is its anti-fragility. Every crash brought a correction that made the system more robust and less prone to be extinct.
It's not going to be crypto's first crash and it is certainly not going to be the last.
The web page for this project refers to Altman as the President of YC, but that's a role he hasn't had for quite some time; how up-to-date is this website?
Well, you don't have to have a standalone coin to get the features you desire. For example the AZTEC Network, which is a privacy protocol, can be used with any Ethereum-based ERC20 token, including algorithmic stablecoins like DAI, and soon Reserve.
A demo a couple years ago showed AZTEC being used to conduct privacy-protected DAI transactions for the first time:
Since then, AZTEC's privacy technology has become more efficient in terms of gas, and more effective at protecting privacy, going from protecting merely the privacy of amounts, to protecting the privacy of amounts transferred and sending/receiving addresses.
AZTEC is also developing a zk-Rollup, which increases Ethereum's maximum throughput from 15 tps to 3,000 tps, so that these private stablecoin transactions can be done at scale (though not 3,000 tps, since privacy comes with a computational and state storage overhead, but still much greater than 15 tps).
You are wrong. We have one which is what he want !!!
Asset “xUSD” - first and only untraceable private stablecoin in monero based blockchain developed by www.havenprotocol.org team. XUSD was started 07/2020 and soon in 02-03/2021 team also start next four assets - xEUR, xCNY, xGOLD and xSILVER. All in private haven protocol.
Monero exists in a global market. There are many many exchanges all over the world. On top of that, Monero can be trivially exchanged for other cryptocurrencies without the use of custodial/permissioned exchanges. The cryptocurrency genie is out of its bottle.
Pure propaganda with no evidence. Major exchanges like Kraken are still trading it even in USA.
Even if it were banned it would have little long-term impact. Literally impossible to stop decentralized swaps unless they also cripple BTC. it would be very powerful actually for people to realise how unstoppable it is.
Mister, we have “xUSD” !!! It is first and only private untraceable stablecoin math backed on $XHV blockchain which is fork of $XMR.
See www.havenprotocol.org
Haven Protocol’s xUSD is what your’re looking for. The potential for this one is huge. Just check havenprotocol.org or join the discord server. Very active community and really exciting stuff to come such other xAssets including gold, silver, euro and Chinese yuan, all with Monero tech. Twitter is @HavenXHV. Cheers.
There are many confusions mixed with stereotypical startup culture in the first video. A global stable currency is not :
- Dollarization, that is an already relatively common phenomenon (Zimbabwe, Argentina...) with controversial effects. Definitely not a silver bullet for hyperinflation.
- A payment system, that requires to work tightly on UI/UX, on cultural preferences, to adapt to local infrastructure... Exactly the reason M-pesa succeeded where many silicon valley startup failed.
And then, there are the technology choices, the stability mechanism, the regulatory aspects ...
One hilarious thing about Tether is that it implicitly acknowledges that the dollar is the source of stability for unstable crypto, and that crypto needs to be "dollarised" to deal with its volatility.
"Furthermore, the Reserve network is, in a sense, a new kind of government. We are supplementing - and in some cases wholly replacing - the government function of money"
From their Ethics page. Should go over well with regulators.
Regulators work for us, and should be answerable to the people through their democratically elected representatives. Their job shouldn't be to protect and expand the control the state wields. It should be exclusively to further the public interest, whether that is through expanding state power, or relinquishing it to make way for new non-governmental mechanisms of socio-economic coordination.
I understand your point from a practical perspective, but I think it's important to point out how far the situation of needing to worry about how regulators will react to decentralization technology is from the ideals of democracy.
What proof do you have that decentralization technology furthers public interest?
I'm sorry, but the institutions are in place today precisely because it is society that upholds them or tears them down. The gears may turn slowly when it comes to implementing change, but they very much are answerable to the public in democratic societies.
My point is regulators shouldn't be reflexively opposed to decentralization and the retreat of state power. Their agenda should be exclusvely to advance the public interest, and it's by no means established that centralization and state control is always and everywhere in the public interest.
>>I'm sorry, but the institutions are in place today precisely because it is society that upholds them or tears them down.
That's one theory. Another is that the institutions that are in place are there because that was the best we could do with the technology of the time. Representative democracy combined with a market economy was as decentralized as we could go 200 years ago with the communication/coordination technology available at the time.
Another theory is that institutions are a trial and error process, and when they start to fail, people naturally form alternatives.
A reflexive anti-decentralization position by a party wielding regulatory power is reckless and not in the public interest.
And society holds up decentralized institutions just as much as it holds up state-based ones. The former could be argued to be an even more direct expression of society's will, as the maintainers of decentralized institutions are the users themselves, rather than delegates that form their own insitituonal interest groups.
Guarantee they're breaking some rule for listing Sam and others on their website as "investors". If not, that's super dodgy that Coinbase Ventures allows their portfolio companies to do so.
If it's running on Ethereum then users will see $5-20 transaction fees and >20 second transaction times. That's not a great experience for first time users
> Initially we are developing on the Ethereum Network but ultimately we expect two-way bridges to enable complete interoperability of the Reserve token across all major smart contract platforms.
Yes, in principle it looks very similar to MakerDAO but I think some details are different.
For example DAI is pegged to one USD to make it as useful as possible but "The Reserve token will initially have a target value of $1.00, but is designed to go off of the peg from the US dollar in the long term.".
The idea is very cool. The criticism against existing cryptocurrencies being too volatile is very valid. I can't help but wonder if this just contributes a "15th" stablecoin to the "14" competing stablecoin standards.
My personal expectation is that the existing frontrunners, Bitcoin and Ethereum, will stabilize in price as the percentage of retail speculators decreases and the percentage of institutional investors + users increase.
I had this rather simple idea the other day: Why not create an artificial index over the last X days and trade that instead? No matter how crazy the price changes of a crypto coin are, the X day average will always be dampened because today's changes will only be 1/X of the change of the average.
Sounds like it would break down real fast if it just says "we track BTC avg over X days" and has no means to defend it.
Consider the following scenario: your index (let's call it BTCEMA) tracks BTC at $30k but BTC does a crypto thing and drops $5k in a day, so it's now below the index. A lot of traders would sell your BTCEMA tokens to buy more real BTC expecting a recovery or get into stable coins expecting a further drop. At any rate, the exchange price of BTCEMA would drop due to sell pressure.
Your indicator has "broken peg" which is an ugly situation that threatens every artificial instrument in that space. The whole miracle mixture for algorithmical and asset-backed stable coins is to prevent such a situation to happen for a longer time. It's a bit too much to explain but they try to defend against this in different ways, e.g. reducing supply to hike price.
In your case, you'd need to buy BTCEMA from the market to prop up price for as long as it takes the moving average to digest the sudden price jump. You'd find yourself in the situation of the Bank of England trying to defend the Pound in 1992 and only making Soros rich instead.
That's not a bad idea. Wrap Bitcoin 120 days moving average into a stablecoin. It could probably be done in a decentralized manner similar to MakerDAO/Dai.
I'd rather hold banks, regulators, and governments accountable so that I can safely and sensibly transfer funds rather than having to rely on bullshit nerd Ponzi schemes.
They're not actually accountable for their actions. History shows this. Fwiw though, I think that stablecoins are pretty much only good for trading pegs and an alternative to international remittances.
Please make your substantive points without calling names. Perhaps you don't owe "bullshit nerd Ponzi schemes" better, but you owe this community better if you're posting here, because that kind of downgrade causes threads to get significantly worse.
I'm surprised that being associated with Coinbase (of "we're NOT going to agree that black lives matter, so stop asking already" fame) and the giant scam
that is USDT is not regarded yet by these people as reputation damage.
A company wants to focus on their product or service instead of getting entangled into the clown festival of social justice politics, a topic that has nothing to do with said product or service.
The people calling ‘USDT’ a scam probably haven’t used it. For the past 5 years, Tether has been the most amazing way for me to transfer dollars across exchanges, or just to hold during market drawdowns.
The fact that it is unregulated, and weakly subject to AML/KYC is a feature for me, not a problem. My money, my business, not the governments.
No, the people calling USDT a scam know that it's backed by nothing, and Tether has no obligation whatsoever to redeem them, ever (it's in their T&Cs).
Their banking partner, Deltec, in the Bahamas is chaired by the man who created the Inspector Gadget TV series.
[edit] Tethers are chuck-e-cheese tokens that became so integral to the entire cryptocurrency market (90% of ETH inflow and 80% of BTC inflow are Tether, not dollars) that nobody can do anything other than pretend they're legitimate. Because if they're not - and they're not - then the whole thing falls down.
Why do you say $10B out of curiosity? The last hard numbers we had were when they issued ~2.5B, and had $800M siezed because they banked with a money launderer (CryptoCapital). If you look at the Bahamian government's report on domestic banks with USD on deposit, the total for all banks grew $1B last year while over $20B Tethers were issued.
Further, let's say they have $10B. If all of those are the proceeds of money laundering (and let's face it, they probably are, after all, why would anyone give Tether money when they could give Circle money or Coinbase money) - then they'd all be forfeit anyways.
And even if that's not true, they're under no obligation to redeem Tether tokens. Ever. It's in the T&Cs.
Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens, and Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves. Tether makes no representations or warranties about whether Tether Tokens that may be traded on the Site may be traded on the Site at any point in the future, if at all. [1]
Arcticbull was very clever to check the Bahamain government report. It's interesting to see how much money can be laundered and hidden, but $10bn starts to be noticeable.
For something on an about page, this copy draws some extremely frank comparisons.
> If users all have to go through a KYC process, this significantly limits the viability of the token to permit free movement of money across borders.
KYC processes are, essentially, the law. Governments go out of their way to do this to cut down on financial crime. Regardless of whether you believe these laws are useful or just, I find it difficult to believe they'll have any success trying to work around these laws. Governments (in general) do not like it when folks try to create loopholes: I wouldn't bet on a project whose stated goal was to avoid complying with the law.