[neumann]

This is a really fun well-written and on point set of articles. Thank you for sharing.

I feel like at this point there isn't anybody defending stablecoins who isn't using them primarily speculative investment/trading. There has yet to be a usecase for distributed ledger that isn't solved better by a centralised ledger other than niche counter-culture solutions whose users are typically blinkered to the fact that they are already a self-selected techno-elite who can't bring their utopia to the commons. That ended a bit more nasty sounding that I intended, apologies.

[wmf]

The other legit use for stablecoins is allowing people in Venezuela, Argentina, etc. to hold US dollars while the US government pretends they don't know this is happening. (Officially the US does not encourage dollarization of other economies against their will.) I agree that a centralized US dollar CBDC that isn't run by scammers would be a simpler way to do this.

[pjc50]

This is basically the valid use case, yes. It turns the bitcoin goldbug inflation paranoia on its head: the stable currency is defined to be the US dollar, and an elaborate proxy system allows people to access that stability when their local government doesn't want them to. Circumventing exchange controls and so on.

Although the current government is having a good go at reducing the value of the currency, it's barely budged on the chart.

[baq]

> Circumventing exchange controls and so on.

This is the only new thing. Maybe.

[datadrivenangel]

Also it takes on the mobile phone money providers with direct 'dollars', which means it basically becomes a currency denominated bank.

[joshtbradley]

You think the same system that chose to bail out the banks in 08 should be fully responsible for our financial future? I believe a more distributed financial system would provide more stability for all of us. The GENIUS Act establishes some very strong standards that I believe will strengthen the economy, the dollar, and enable more people to enter the financial services industry in a competitively healthy way. A scammer would have a hard time 1:1 backing their stablecoins with bonds and equivalently stable assets.

[wmf]

Despite its "mismanagement", people in shithole countries seem to prefer USD not EUR/CNY/RUB/XAU.

I do hope regulation drives Tether out of business.

[derangedHorse]

That's thanks to the legacy of Bretton Woods and other things like the petrodollar. It's not a result of our monetary policy or output. The US is good at war and has the benefit of convenient geography. Those are the things that hold up the hegemony we see today.

[queenkjuul]

That system is still deciding your financial future

[coderatlarge]

i use one of the largest credit unions in the usa (grown through m&a over the last twenty years). their ability to follow instructions is at best at tech-intern level. their fees are incredibly fat and their people exhibit serious cya and complacency in almost every interaction. my confidence is at an all-time low in their competence.

[queenkjuul]

I don't care about them; the big banks are still deciding how things work, even with regards to crypto

[coderatlarge]

i still find the original idea of credit unions appealing: ie a small local organization focused on outserving a specific membership who are naturally bound together by meaningful preexisting ties.

the trouble seems to come when the credit union decides it needs to “scale “ sort of defeating the original thing that made it any good. perhaps that comes from just greed (ie the ability to charge fees on a larger customer base) or maybe it’s a requirement of the costs of providing an ever-widening array of newly “expected” services.

[csomar]

The reason they don’t want a CBDC is to be able to collect interest on behalf of the people holding the currency. If the state launches a blockchain CBDC, the state will profit. It’s too much money not to corrupt the most powerful people on the planet.

[bko]

It's not just places with hyperinflation. It's any country. Why should anyone be restricted from holding USD or have to pay crazy fees to buy dollars?

> I agree that a centralized US dollar CBDC that isn't run by scammers would be a simpler way to do this.

I don't think it's a stretch to imagine that the government would ban all other stable coins and strictly control what "valid commerce" is allowed to be done with the centralized coin (see Operation Choke Point)

https://en.wikipedia.org/wiki/Operation_Choke_Point

[potamic]

If a country does not allow their citizens to exchange currency, then this is as good as a black market and comes with the same risks as obtaining currency through any other black market means.

[nlitened]

Carrying around or storing piles of foreign currency is much riskier than having a USDT wallet. You also cannot fly to another country with cash.

[dzonga]

crypto off-ramps & on-ramps are expensive though.

check binance & other markets - e.g convert USD 10 to USDC

[nlitened]

Expensive relative to what? When people are rescuing their hard-earned savings of 200k USD out of a third-world country, they would be happy to pay even double-digit per cent commissions, and crypto is much, much cheaper, faster and safer than all other available options.

Of course, if you're a US citizen transferring 200k USD from Chase to Bank of America, crypto doesn't make any sense.

[fireflash38]

Who are these people in 3rd world countries that have 200k USD cash? You make it sound like they've scrounged to make it happen... But its far far more likely to be people either trying to wash the money or they were from less than legitimate sources.

Definitely not lower class people like you seem to imply (or perhaps I'm just reading into it?)

[ChadNauseam]

> There has yet to be a usecase for distributed ledger that isn't solved better by a centralised ledger

what about situations where centralized ledgers won't serve you? e.g. someone who wants to buy drugs, or sex workers want to get paid. And you mention "niche counter-culture solutions" but I don't think it's so niche - in 2002, the government of Argentina stole 2/3rds of everyone's savings by forcibly converting their dollar-denominated bank accounts into pesos at a terrible exchange rate. Not having to worry about this because you have a trustworthy government is nice, but it puts you into an elite class of your own.

[wakawaka28]

What you're talking about, resistance to government meddling, is more of a function of the currency than the ledger. Cryptocurrencies only work because of people silly enough to buy them in exchange for actual "valuable" or official currencies (which can be imposed on some people in the world at gunpoint). If a cryptocurrency was forced on you at gunpoint, it most certainly would not be one that provided any anonymity.

Do cryptocurrencies provide value to people living in third-rate hellhole countries? Perhaps, because they are connected to the outside world. Ideally you could just have a foreign bank account that your country cannot touch. If the big governments gang up on crypto exchanges, then crypto will be worthless. The only reason they don't gang up on the exchanges seems to be that they (the people in government) use crypto for nefarious activities and money laundering.

The technological innovations of cryptocurrencies make for good thought experiments or puzzles, but serve as a distraction from their inevitable uselessness.

[lurk2]

> Ideally you could just have a foreign bank account that your country cannot touch.

Doesn’t solve the problem as these assets can still be seized by foreign governments.

[carleverett]

I can’t really think of a better, more concise pitch for cryptocurrencies than “ideally you could just have a foreign bank account that your country cannot touch.”

[soco]

I'm sure you forgot that your country can send a uniformed guy to seize said foreign bank account on a whim. Or you think you'd keep it for long, while being roughed (or simply stored) in a dark cellar?

[lurk2]

You are misinterpreting his comment. He is saying that the idea that you need to store your money in a foreign bank account to keep it safe is an argument in favor of cryptocurrency, because that way you don’t need to rely on a foreign bank at all.

[carleverett]

This is a great pitch for digital privacy as a global standard as well.

[wakawaka28]

It partially solves the problem of not trusting your own government.

[dbdr]

> you could just have a foreign bank account that your country cannot touch

How easy is it from most people in the world to "just" open a bank account in another country?

[wakawaka28]

Probably about as easy as it is for them to get by using Bitcoin in real life... Possible but inconvenient.

[nlitened]

> serve as a distraction from their inevitable uselessness

I don’t understand your point. You said that crypto is only useful as long as governments use it for nefarious purposes and money laundering — so basically it’s a guaranteed relevancy in the future, no? How is that inevitable uselessness?

[wakawaka28]

>You said that crypto is only useful as long as governments use it for nefarious purposes and money laundering — so basically it’s a guaranteed relevancy in the future, no? How is that inevitable uselessness?

It's hard to say how long those nefarious purposes will be tolerated. There may come a time when the governments of the world don't even have to pretend to not be doing nefarious shit. At that point, cryptocurrencies will only be a thorn in their side, and will be under heavy attack.

[barumrho]

This seems to misunderstand stablecoins since it is useless for investing/speculation as the value is just $1 if it's successful in its goal.

[bergen]

I'd argue crypto casinos (pump.fun comes to mind) would not work without stablecoins because no one would back them with real dollars.

[carleverett]

But stablecoins are backed by real dollars.

People hold dollar-backed stablecoins because they believe the US dollar to be the most durable unit of account on the planet.

All the proof you really need for that is that most crypto users outside the US still consider the value of their crypto tokens in terms of how many US dollars it’s worth.

The author of this article talks about this being a “parasite” to the US monetary system, but it’s hard to think of a better thing that could’ve happened for the US. Not only has it reinforced that dominance… it’s also driven hundreds of billions of dollars of US treasury bills purchases from providers like Tether and USDC.

https://tether.to/en/transparency/?tab=reports

[w10-1]

Stable coins are mostly backed by Treasuries, so it’s engineering instability: a run on coin redemption triggers treasury sales which raises interest rates which triggers a run on any asset backed by treasuries like coins, and so on.

It’s like the 2008 crash: people speculating because they think housing never goes down, except a market-scale drop can trigger an uncontrollable rush for the exit. With banks and companies permitted to hold coins as assets, the impact is broad but impossible to regulate ex ante, and difficult to model monetarily.

It’s what I would do if I were Putin and Xi, frustrated with the western controls on the banking system (that have mostly enabled us not to have to go to war).

[carleverett]

No one is speculating on stablecoins.

Keep in mind stablecoins aren't a product built for Americans, they're built for people outside the US financial system to give them access to some of the benefits of the US's relatively solid money.

[lavezzi]

Please tell me you're not linking to one of the biggest frauds of all time as evidence of doing the right thing and being backed by real dollars?

[carleverett]

If it's a fraud, then it's one with a working product.

In 2022 when confidence in stablecoins plummeted after the Terra collapse, $20 billion in Tether was liquidated in a month - $10 billion of that in a single day: https://www.coingecko.com/en/coins/tether

Through that black swan event Tether did its job, processing redemptions for collateral dollar for dollar.

[FergusArgyll]

This is an awful case of preconceived notions!

Stablecoins are not speculative or investments at all - their price stays the same. That's where stable in stablecoin comes from.

You see crypto and think day trading

[throw101010]

> their price stays the same.

TerraUSD enters the chat

You're right that they aren't speculative in the financial sense of "hopefully gaining value over time", but you do speculate (in the more general sense) on the fiat-pegging mechanism(s) to work to preserve the value you are storing in them...

[scyclow]

There are different flavors of stablecoins though. There's the ponzi scheme flavor that is propped up based on hand waving alchemy, and there's the boring (and now regulated) flavor that's actually backed by real money.

[lavezzi]

And who is the authority to prove which stablecoins are ponzis and which are 'backed by real money'?

[xboxnolifes]

Sure, in the same way that holding USD is speculating that the government won't halve its value tomorrow. There's speculation, and then there's speculation.

[laserbeam]

> There has yet to be a usecase for distributed ledger that isn't solved better by a centralised ledger

As I understand it, many countries in the European Union use distributed ledgers for elections. Essentially it lets you cross reference votes and store that database across servers in multiple countries. It also prevents post-election data tampering by the state holding the election.

My understanding is this this system is not an open to every random Joe who wants to have a server (like bitcoin is). I think you still need to be a state actor to be part of the distributed database (so it's not a zero trust environment).

(Unfortunately, I don't have any good links to back this claim up)

[joshtbradley]

Would you consider Stripe and PayPal also interested in speculative investment/trading? They seem responsible to me. Also, stablecoins aren’t speculative. Cryptocurrencies absolutely are. But stablecoins are pegged to USD, hence “stable.”

I think you’re right to criticize crypto as a techno-elite project. However I think stablecoins have a legitimate use case for billions of people who don’t have access to good banks, or a stable currency, and can’t afford traditional fees. IMO it’s one of the best things to come out of crypto.

[csomar]

I agree with the premise that on a tech basis, a centralized ledger is just as good, if not better, than a decentralized one.

The problem stablecoins are solving are self-inflicted: KYC to open a bank account, restricted nationalities, account freezes, capital controls, taxation over-reach, etc.

At some point someone figured out that if they start over, there is a lot of “value” to be unlocked out there; and paid/lobbied/sponsored the right person to execute on that.

[johncole]

I agree, I see very few (none) use cases for crypto that aren’t human misery trafficking. This article seems to explain that well.

[CaptainFever]

Buying NSFW things.

[eszed]

I think the further down the supply chain of "NSFW things" you go the more closely it resembles "human misery trafficking".

[BobaFloutist]

I don't think they were referring to live-action "NSFW things" which is traditionally called "pornography."

[eszed]

The same applies to drug manufacturing, so far as I'm aware.

[_9ptr]

Exactly