[pavlov]

This is fundamentally a centralized system like PayPal. Most transactions never touch crypto. Meta/FB keeps some USDP at hand for those very few users who actually want to do crypto withdrawals.

Facebook has been trying to get payments into WhatsApp for a long time. This is just the latest experiment to try to find something that would be acceptable to local regulators while simultaneously extracting some value from the smoking ruins of the Libra/Diem/Calibra/Novi fiasco.

[thebean11]

Do you have a source for them only keeping "some" at hand? You brought up PayPal, which holds 100% of users crypto through an intermediary (Paxos).

[reginold]

The Novi site for the Whatsapp partnership says this:

> "When you add money to your Novi account, we convert it to USDP (Pax Dollar), a stable digital currency issued by Paxos Trust Company, a regulated financial institution. USDP is designed to have a stable value relative to the US dollar. So on Novi, 1 USDP is equal to 1 US dollar."

To me that implies it's done on chain...I guess it could just be in their centralized database though.

Curious what the Whatsapp UI does for moments when USPD hits $0.99 like December 1 2021 when it hit $0.989.

Source: https://www.novi.com/WhatsApp

[vmception]

Protip: this is how Tether works but people in the west dont want to believe that people in the east actually deposit fiat into bitfinex.

Multiple US regulators came to the same conclusion. One regulator said “well you usually create tethers 1:1 in response to deposits the vast majority of times and vast majority of amounts, but for the brief few times you didnt at least put a disclaimer up, also here is a fine for not having the disclaimer up”

[BbzzbB]

Here's one blatantly noticeable difference that makes me more trustful of USDP than USDT even without being informed about Pax : total USDP in circulation ("market cap") went down nearly 50% when Bitcoin and cryptos crashed in May-June [0], as you would expect if they indeed offer an off-ramp to USD as people will be bailing out in downturns and if the coin is pegged to cash flows.

USDT? Up and up, it has not once significantly went down [1]. Do people truly believe that they are pegged to treasury and money flows to Bitfinex (despite knowing it is BS) and that they've never been in a significant out-flow period? (Edit: There is one I notice in October 2018 of also nearly 50% from $2.8B, much later than the actual 2017-18 crash. Doesn't take away from the peculiarity of the rest of the chart, but gotta point it out in fairness.)

Anyone with significant money in crypto should be terrified by these sketchy money printers (the irony) rather than complacent of. If and when something like Tether blows up, these are dozens of billions in liquidity that will go poof over night.

[0]: https://coinmarketcap.com/currencies/paxos-standard/ (click market cap)

[1]: https://coinmarketcap.com/currencies/tether/

[vmception]

Right, the redemptions. The counterpoint to that is how much do people withdraw from their investment accounts? They just go to cash within their investment accounts, while other people are still earning and depositing.

The same standard would apply to Bitfinex. Only explicit tether redemptions for fiat at the issuer cause tethers do be destroyed. People just sitting in database-fiat on the exchange during a risk-off moment wouldnt cause tether redemptions.

If a more respected exchange like say TD Ameritrade issued a stablecoin upon every deposit, it would go up and up and up too, even in market crashes, as people use their investing accounts as value storage even in market crashes, anticipating to buy dips or wait for other market conditions.

[vineyardmike]

Maybe tether just hopes to be so entrenched and trusted that they become their own "Central bank of crypto". Doubt it would work considering the whole point of crypto is "minimal trust", but being the money printer could be a valid business model.

[BbzzbB]

An understatement, it's a fantastic business model. As I recall they have less than 12 employees, and they have printed like $80B with zero accountability. There's a saying that a good and strong business has a licence to print money, in their case it is literal.

Frankly I am baffled it is still going, I think it has to do with it being the first, but can't understand it hasn't fallen apart since or been taken over by better designed stable coins. People called Bitcoin fairy dust, but at least its supply is determined by its protocol and its price by a market - poorly regulated as it may be. Tether is proper fairy dust, holding together thru sheer wishful thinking of this tacit agreement that it is worth $1 a pop.

[pjc50]

> usually create tethers 1:1 in response to deposits the vast majority of times

This as quite often been in whole round billions in the middle of the night on a weekend ...

> people in the east actually deposit fiat into bitfinex

In non-convertible RMB?

I appreciate that the demand for a way round currency controls is a big driver for cryptocurrency, but I'm still not clear how that sustainably functions.

[vmception]

Which doesn't inherently imply anything.

Are those country’s financial networks so primitive that a transaction message cant be sent on a weekend like in antiquated networks?

There is also other fiat than mainland RMB

[skybrian]

Perhaps "on hand" means "in a hot wallet?"

[pjc50]

> This is fundamentally a centralized system like PayPal.

This is fundamentally a centralized system like wechat pay, an app you can't see in the West. If it's allowed it will be hugely successful.

[azinman2]

Or Apple Cash, Cash App, Venmo, Zelle, etc.

[vineyardmike]

I don't think its a given that WeChat is fundamentally the "right" UX and the west is behind.

The cultural/regulatory differences between china and western (free) countries means that (1) different models thrive differently and (2) pressure to centralize delivery through WeChat is there from the gov in china but not for the rest of the world. I think FB would love to be WeChat to avoid the App Store, but i'm not sure users would actually prefer that.

[MuffinFlavored]

curious, why USDP and not USDC or any of the other alternatives?

also, why didn’t libra/the likes work out?

[exdsq]

One issue with Libra was Facebook. FB has the user numbers and money to roll out a potentially successful cryptocurrency that's marketed as a currency. Regulators got scared and it got critiqued/shut down across almost every market.

[MuffinFlavored]

why would a successful cryptocurrency scare regulators? bitcoin is "successful". coinbase and popular wallets are "regulated" (reported to IRS, etc.)

[Vespasian]

Facebook controlling what is equivalent to a central bank is scaring regulators. No one wants Mark in charge of the money supply.

Partnering with a project that isn't Facebook helps with that (at least a little bit)