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> 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?

pmorici 1970 days ago

I assume these stable coins are making interest off the assets they hold to back the stable coin. Isn’t that the obvious play here?

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.

rojeee 1970 days ago

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...

secfirstmd 1970 days ago

What's your view on stuff like Sia and Filecoin? I agree with you about the lack of actual use for stuff like Bitcoin etc but the storage cost aspect of those two is interesting for sure.

> 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.

Hardly. I just don't see it solving any problems for anyone in a country without robust financial institutions either, certainly not at scale.

ac29 1970 days ago

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.

Look at their website, they say clearly that holding stablecoins is just part of the first phase.

riffraff 1970 days ago

> making interest off the assets

how? Money market funds have negative returns these days.

pmorici 1970 days ago

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.

vntok 1970 days ago

> 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?

WA 1970 days ago

House price appreciation is a side effect. You can still collect rent. Or have a roof over your head.

yholio 1970 days ago

You are right, it's just like real estate investment, but using speculative tokens that have no intrinsic value.

It's like you take the housing part out of the housing bubble, and are left with the speculative aspect, the bubble.

jdc 1970 days ago

At least with cryptocurrency speculation people aren't forced into slums or worse.

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.

muratsu 1970 days ago

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.

pjc50 1970 days ago

It's certainly worth interrogating how a physical asset with real depreciation and maintenance costs goes up in value over time.

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.

codebolt 1970 days ago

Remove the unconstrained supply of Mickey Mouse money (Tether) and eliminate wash trading, and you will watch Bitcoin descend into the abyss rather quickly.

mlthoughts2018 1970 days ago

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.

mlthoughts2018 1970 days ago

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.”

Codebolt calls for the death of BTC, news at 11.

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.

codebolt 1970 days ago

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.

[0]: https://www.reddit.com/r/UniSwap/comments/l43yka/what_happen...

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.

codebolt 1970 days ago

> already priced in

Nothing can be effectively priced in as long as you have an artificial and illegitimate source of liquidity pushing the price up. Such a market doesn't allow for rational pricing mechanisms to manifest.