Cryptocurrencies

[UK]

https://www.wsj.com/articles/walk-in-cryptocurrency-exchanges-emerge-amid-bitcoin-boom-11633107697

 

Cryptocurrency storefront operators say in-person advice and a physical presence instill trust among those unlikely to invest

online

 

“We allow individuals from all walks of life to be able to participate in this digital asset ecosystem, without the hurdles of attempting to onboard with self-service online exchanges, not to mention the technological barriers that people of a certain age might perceive,” said Adam Hack, the chief executive and founder of Coin Nerds.

 

The exchanges charge fees ranging from 0.99% to 5% for each transaction, slightly more than those charged by large online exchanges.

 

“We’re not going to have a digital revolution, for lack of a better term, without everybody participating in the ecosystem,” he said. “A lot of people are still grasping the concept and they still want to learn how to use it.”

 

 

 

 

[Fly]

21 hours ago, TwoCitiesCapital said:

Who is ready for the resumption of the bull market and new highs before year end?

 

I was born ready 

 

17 hours ago, wachtwoord said:

 

Why on Earth do people say Ethereum in the same breath as Bitcoin? Wouldn't buy it at 1% of the current price ...

 

Agreed. ETH has some nifty tricks but it is not in the same category as BTC. Ultimately, I think we will see BTC Layer 2 or 3 solutions dominate altcoins. We're already seeing it with stuff like Strike/LN making high-TPS transactional altcoins irrelevant.

 

11 hours ago, UK said:

https://www.wsj.com/articles/walk-in-cryptocurrency-exchanges-emerge-amid-bitcoin-boom-11633107697

 

Cryptocurrency storefront operators say in-person advice and a physical presence instill trust among those unlikely to invest

online

 

“We allow individuals from all walks of life to be able to participate in this digital asset ecosystem, without the hurdles of attempting to onboard with self-service online exchanges, not to mention the technological barriers that people of a certain age might perceive,” said Adam Hack, the chief executive and founder of Coin Nerds.

 

The exchanges charge fees ranging from 0.99% to 5% for each transaction, slightly more than those charged by large online exchanges.

 

“We’re not going to have a digital revolution, for lack of a better term, without everybody participating in the ecosystem,” he said. “A lot of people are still grasping the concept and they still want to learn how to use it.”

 

I guess all adoption is good? This is a puzzler to me. I'd rather see increases in low/no fee BTC ATMs like this:

 

https://www.nasdaq.com/articles/k1-the-first-bitcoin-atm-designed-and-built-in-el-salvador-2021-08-26

 

Lastly, thoughts on Twitter adding Bitcoin LN integration for tipping? 

Edited October 2, 2021 by Fly

[SharperDingaan]

Nothing new here, but if you were hoping for great things from WeChat or Alipay, you might want to think again. You also might want to rethink stable coin entirely, and recognize that the US is not driving the bus. It's hard to find a trustworthy platform that can convert stable coin into digital yuan, and without digital yuan you're excluding the 2nd largest market in the world.

 

SD

 

https://oilprice.com/Finance/the-Markets/Is-Chinas-Digital-Yuan-The-Death-Knell-For-Crypto.html

The crypto ban comes at the same time as the Chinese government’s roll-out of the Digital Yuan, its sovereign digital currency now either years in development. The digital yuan was envisioned back in 2014 and already has distributed some $30 million in digital currency. It’s a clear rival to unregulated cryptocurrencies. It also is the government’s way of challenging WeChat and Alipay, the two private giants dominating the mobile payments market.

 

[fareastwarriors]

Bug puts $162 million up for grabs, says founder of DeFi platform Compound

 

https://www.cnbc.com/2021/10/03/162-million-up-for-grabs-after-bug-in-defi-protocol-compound-.html

 

About $162 million is up for grabs after an upgrade gone very wrong, according to Robert Leshner, founder of Compound Labs.

 

Some, including a core developer at DeFi platform Yearn, are billing this as the biggest-ever fund loss in a smart contract incident.

[SharperDingaan]

One of the key implementation issues with blockchain is 'reliance upon the code'. Operational managers have long mocked this 'reliance', citing coding culture, and the reliable regularity of coding logic failures  Coders code! get out of my way and let me code! - it's not my problem if you don't continually test the algorithm logic! Sure ....

 

As long as developers/start-ups drive the bus (current state), expect more of this. The default position is to shut down crypto entirely (China), and a phased-in use, subject to layered and robust ongoing testing (China). Of course, the technology will roll out - but most would expect that it'll be atop a pile of developer skulls.

 

Ideally, you don't contribute your skull!

 

SD

 

 

 

  

Edited October 4, 2021 by SharperDingaan

[TwoCitiesCapital]

On 6/22/2021 at 11:48 AM, Castanza said:

You’re expecting the US and other G7 countries to adopt policy of a country that 99% of people probably couldn't even point out on a map? 

 

I think when people talk about “ANY” country and policy adoption at a high level, it’s generally assumed they mean influential countries. Again, I’m not trying to shit on El Salvador….but from a purely influential standpoint I’d call it a nothing burger. 
 

if someone “bigger” adopts it, then we can talk. But it (insert country) certainly isn’t going to be because El Salvador did.
 

I still think it’s likely the government (US) takes action before their own currency is debased by Bitcoin. 

 

Brazil is moving forward to vote on a bill to potentially legalize Bitcoin as tender in Brazil. 13th largest economy in the world (9th on a PPP basis) and uses it's own currency - a currency that has lost more than half of it's value against the USD over he last 10-years. 

 

https://coinquora-com.cdn.ampproject.org/v/s/coinquora.com/brazil-set-to-adopt-bitcoin-as-its-legal-tender/amp/?amp_gsa=1&amp_js_v=a6&usqp=mq331AQIKAGwASCAAgM%3D#amp_tf=From %1%24s&aoh=16334129795541&csi=0&referrer=https%3A%2F%2Fwww.google.com&ampshare=https%3A%2F%2Fcoinquora.com%2Fbrazil-set-to-adopt-bitcoin-as-its-legal-tender%2F

[SharperDingaan]

The 1st world just doesn't 'get' that the intent behind legalizing BTC is NOT to replace the domestic currency (Colon, Real, etc.), it is to COMPLEMENT it. and AVOID using USD. 

 

BTC used as a store of value, not something to buy your groceries with.

BTC preferred over USD as a state 'work around' the use of USD as reserve currency.

BTC to make your wealth both portable, and inflation resistant.

BTC to make remittances easier  

 

SD

[fareastwarriors]

Anyone Seen Tether’s Billions?

 

A wild search for the U.S. dollars supposedly backing the stablecoin at the center of the global cryptocurrency trade—and in the crosshairs of U.S. regulators and prosecutors.

 

https://www.bloomberg.com/news/features/2021-10-07/crypto-mystery-where-s-the-69-billion-backing-the-stablecoin-tether?srnd=premium&sref=SCKvL4TY

 

(open in private/incognito mode, if you don't have access)

[LC]

I was just about to post that

[Dave86ch]

For everyone interested in the  cryptocurrencies space I suggest to read 

 

The Sovereign Individual: How to Survive and Thrive during the Collapse of the Welfare State

Book by James Dale Davidson

 

It was written in 1997 and in my opinion the author gives a good frame to how to think about Bitcoin and our society beside short term fluctuations.

The interesting fact is that Bitcoin didnt exist at the time.

Edited October 9, 2021 by Dave86ch

[SharperDingaan]

It is useful to think of cryptocurrency in terms of an 'upstairs' and 'downstairs' market. The upstairs market is BTC; of greatest value to the sovereign states, arms and drug dealers, dictators, and criminal elements. Setlle via BTC vs the USD. The downstairs market is the multitude of other crypto from sh1te coin to stable coin to Libra to CBDC.

 

Like it or not, the downstairs market is going to primarily use zero cost CBDC vs BTC; individuals using a local currency CBDC to pay for groceries, plus a major CBDC as the store of value. Most expecting local currency CBDC to subsequently 'evolve' into local 'trading block' CBDC, ie: a 'south american' CBDC, a 'middle-east' CBDC, a 'carribean' CBDC, a 'african' CBDC, etc. The sh1te coin, stable coin, and Libra's made obsolete.

 

Not a bad thing, but don't expect an elegant 'transition'.

 

SD

Edited October 13, 2021 by SharperDingaan

[Castanza]

7 hours ago, Dave86ch said:

For everyone interested in the  cryptocurrencies space I suggest to read 

 

The Sovereign Individual: How to Survive and Thrive during the Collapse of the Welfare State

Book by James Dale Davidson

 

It was written in 1997 and in my opinion the author gives a good frame to how to think about Bitcoin and our society beside short term fluctuations.

The interesting fact is that Bitcoin didnt exist at the time.

I concur, it’s a very good book and worth a read and re-read. 
 

@TwoCitiesCapital The Brazil news if passed is certainlysignificant, but I still thinking looking at it as “the 13th largest economy” isn’t the right way. BTC needs a truly influential country to adopt it. I don’t think Brazil quite fits that mold. But perhaps a segway? 

[Krapdivad]

What do people here think about a crypto savings account I.e. buying Gemini Dollars (stable coin) for 8% interest?

 

https://getstarted.gemini.com/earn-gusd/

 

It says it’s backed by fiat and FDIC insured up to $250k. 
 

There are no fees for buying or selling these gemini dollar stable coins. 

[fareastwarriors]

56 minutes ago, Krapdivad said:

What do people here think about a crypto savings account I.e. buying Gemini Dollars (stable coin) for 8% interest?

 

https://getstarted.gemini.com/earn-gusd/

 

It says it’s backed by fiat and FDIC insured up to $250k. 
 

There are no fees for buying or selling these gemini dollar stable coins. 

 

I'm a bit confused. Only USD in your account is FDIC insured, not other securities/crypto right?

 

Quote

 

FDIC Insurance

U.S. dollar deposits in your Fiat Account held in one or more Omnibus Accounts at one or more Banks located in the United States are held with the intention that they be eligible for Federal Deposit Insurance Corporation (“FDIC”) “pass-through” deposit insurance, subject to the Standard Maximum Deposit Insurance Amount per FDIC regulations (currently $250,000 per eligible Gemini Customer) and other applicable limitations. Our policy is to comply, in good faith, with the regulations and other requirements of the FDIC for pass-through deposit insurance, including those contained in 12 C.F.R. § 330.

 

Please note: Non U.S. dollar deposits held at any Banks or financial institutions, as well as U.S dollar deposits held at Banks or financial institutions located outside of the United States, may not be subject to or eligible for FDIC deposit insurance.

 

Certain circumstances may require us to transfer fiat currency between two or more of our Omnibus Accounts or terminate our relationship with one of our Banks. Movements of fiat currency between Omnibus Accounts are recorded in detail and will not affect the available balance in the Fiat Account of your Gemini Account or jeopardize the availability of FDIC insurance, subject to applicable limitations.

 

 

https://www.gemini.com/legal/user-agreement#section-fdic-insurance

[Krapdivad]

1 minute ago, fareastwarriors said:

 

I'm a bit confused. Only USD in your account is FDIC insured, not other securities/crypto right?

 

 

https://www.gemini.com/legal/user-agreement#section-fdic-insurance

Indeed, you are correct 

[TwoCitiesCapital]

2 hours ago, fareastwarriors said:

 

I'm a bit confused. Only USD in your account is FDIC insured, not other securities/crypto right?

 

 

https://www.gemini.com/legal/user-agreement#section-fdic-insurance

 

Gemini is a crypto exchange that sponsors its own stablecoin. They take institutional deposits in dollars and issue GUSD one for one in exchange for those dollars. The dollars are held in reserve to back the GUSD - the GUSD circulates on the ethereum blockchain to provide liquidity to the crypto system. Coinbase does something very similar with USDC. 

 

I believe the FDIC insurance is talking about the dollars held in reserve by Gemeni - not your GUSD. They likely have relationships with dozens of banks and can open depository accounts to hold the cash from your deposit as reserve against the GUSD issued up to the 250k FDIC limit. 

 

I work with a traditional brokerage company and we do something similar for clients with large cash balances - rotate cash balances across multiple financial institutions  so that no single institution holds more than the 250k of the client's funds to stay within FDIC limits. 

 

So now you have an account that holds GUSD. What happens to this? How does the GUSD earn interest? Like a traditional bank. They lend it within the crypto space to traders, stakers, hedge funds, crypto-based businesses, or prop-trading strategies etc. There is absolutely risk that the loans they make default and that the institutions are found to be insolvent. That being said, both BlockFi and Celsius survived the 80% crypto drawdown in 2018/2019 without defaulting on depositors so I generally believe the internal risk controls have proven sufficient. 

 

I don't have an account at Gemeni myself, but I do this same thing at BlockFi and Celsius. BlockFi pays monthly - Celsius weekly. Currently, BlockFi is paying 8.25% on stablecoin deposits and Celsius is paying 8.88%. I have personally been with BlockFi since February and Celsius since July - have deposited and withdrawn from both without issue. PM me if you're interested in referral codes from promo offers. 

Edited October 10, 2021 by TwoCitiesCapital

[SharperDingaan]

So many things just don't cut it ....

 

The investor has Gemini Dollars, not USD. The investor has no FDIC insurance, Gemini does.

My USD is backed by the US Fed and everyone accepts it. Their Gemini Dollar ... not so much. So why do I need them?, and why are they better than USD? Nobody else has a CBDC that I can use instead?

 

If EVERY USD collected backs a Gemini Dollar, what currency are they paying that 8% interest in - Gemini dollars with NO USD backing them? Similarly, what currency is the landlord, the developers, the consultants and the staff getting paid in every month? - pretty sure its USD, and not Gemini Dollars! So .. where are those USD coming from?    

 

This only works if Gemini is acting like a bank. Borrows in USD, pays back in Gemini Dollars (your contribution). USD deposits offset with notional USD liabilities funded with notional Gemini Dollars. Risk managed via USD derivatives based on notional amounts - NOT actual amounts exchanged. Keep only enough USD to meet redemption demand, and MTM settlements - fund it via a credit line, and spend the rest? Scale it up and you have a Tether?

 

The only way to benefit is to 'not engage'.

Simply because as soon as a USD CBDC is announced, it would start a run on Gemini to USD conversion .... creating a lorced liquidation demand for USD that Gemini does not have, and cannot raise - BECAUSE it is liquidating.

 

SD

 

  

 

Edited October 10, 2021 by SharperDingaan

[TwoCitiesCapital]

5 hours ago, SharperDingaan said:

If EVERY USD collected backs a Gemini Dollar, what currency are they paying that 8% interest in - Gemini dollars with NO USD backing them? Similarly, what currency is the landlord, the developers, the consultants and the staff getting paid in every month? - pretty sure its USD, and not Gemini Dollars! So .. where are those USD coming from?    

 

Not quite sure I understand the issue here. Let's assume they lend out $1,000 to a crypto company at 10% interest. Does it matter if that crypto company pays that $100 interest in GUSD acquired on the market or via revenues? Or pays it in USD that Gemini then holds in reserve to issue new GUSD against? It matters not who holds the GUSD, or what form the interest takes, so long as Gemini has depository reserves to back the GUSD in circulation one for one.

 

As far as a run on the bank, again - assuming that the U.S. releases a CBDC that is Ethereum compatible (a very big 'IF'), who is to say an actual bank run would occur? I'm not so certain. Just like the introduction of GUSD and USDC, and DAI, and a half dozen other more transparent and audited stable coins didn't create a run on Tether.

 

But let's assume it did create a bank run and everyone in the world who holds GUSD redeems for dollars at the exact same time. Those dollars are held in reserve in bank depository accounts. Why wouldn't Gemini be able to redeem against that?

 

Again, all that matters for Gemini and GUSD holders is that the dollars are still in reserve to be redeemed - and Gemini is audited regularly displaying this. The people who will find themselves in a world of pain? The people who borrowed in GUSD who can no longer put their hands on it to repay the loans because there will be no GUSD in circulation. But even in this scenario, I'm fairly certain they could work out a deal with Gemini, or BlockFi, or Celsius, or whomever to repay the loan in fiat equivalent, or whatever digital currency is offered by the U.S. gov, because they should all be the same $1 equivalent. 

Edited October 11, 2021 by TwoCitiesCapital

[SharperDingaan]

Step back and look at stable coin objectively.

Is Gemini not identical to the ‘weak’ country (ie: El Salvador) attempting to maintain a currency peg against a stronger standard (ie: gold)? Growth controlled by the net flow of standard (gold) into the country. Stable so long as the weak country can maintain the markets confidence. Currency collapses if/when the peg can be broken.

 

The US used to have a gold standard, but ultimately couldn’t maintain it. The BoE famously had a currency peg, ‘broken’ by Soros. In both cases, it was a loss of market confidence in the US &/or BoE reserve bank ability to maintain the peg - that triggered the collapse. Stable coin issuers are multiple times out of this league.

 

The market just has to be of the opinion that the stable coin issuer DOESN’T HAVE sufficient reserve of the standard to maintain the peg and calls the bluff. In practice – the issuer has cumulatively spent more of the standard than they have taken in and is no longer able to cover the shortfall via outside financing. Profit via a short sale of the overvalued currency

 

Re GUSD? I surmise their cumulative net flow of USD will be negative, and sustainable ONLY if they can maintain external USD financing. When a US CBDC introduced, there would be a run on GUSD to USD redemption, which Gemini will not have the liquidity or USD assets to meet. Peg breaks, Gemini collapses.

 

All other US based stable coin in a similar position, all at the same time. Market monetizes by breaking the tether peg and shorting BTC via CME puts. Federal Reserve intervenes by allowing Gemini to directly exchange GUSD for CBDC at a specified fixed exchange rate. Controlled chaos, and BTC proof of concept further enhanced.

 

Long term? Few doubt that both stable coin and NFCs are highly desirable things, but there needs to be a widespread market cull. Until then … its risk versus reward,

 

SD

   

[SharperDingaan]

Re Tether: Where is the USD money? Lot of the wrong people beginning to doubt that it is actually there and asking what is real versus notional (ie: derivatives). Not a lot different to the early days of the ENRON collapse, and everybody really hoping that the financing structure is indeed 'OK'.

 

SD

Edited October 11, 2021 by SharperDingaan

[SharperDingaan]

The accounting quirk that underlies most stable coin ….

 

I give XYZ company 1M USD, they give me an unsecured note paying X% interest/year – called 1M XYZ Dollar, backed by the full faith and credit of XYZ company, and denominated in one-dollar increments. XYZ company: Debit Cash, Credit Redemption Liability.

 

In banking, if a customer deposits money and there has been no activity in the account for X years – the bank can reduce its liability (customers deposit) and credit its equity. However, the bank must then send the deposit to the nations central bank for safekeeping: debit equity, credit cash.

 

XYZ company estimates that some of the XYZ dollar will redeem within 180 days (50K, or 5%), but the remaining XYZ (950K, or 95%) will never redeem. XYZ company debits redemption liability and credits equity. The balance sheet shows 1M in cash, 50K in liability, and 950K in equity – debt/equity ratio looks spectacular!

 

XYZ puts up 100% of its unencumbered 1M in cash (T-Bills, Bonds) as security, borrows 900K and spends the money on IT development, capitalizing the entire cost (simplicity). The balance sheet shows 100K in cash, 900K in a capitalized asset, 50K in liability, and 950K in equity. The custodian will also show 1M in T-Bills and Bonds (collateralized against debt). Were you able to see the balance sheet you would see NO debt, as it is netted against the cash balance.

 

I falsely think the 1M in custodian assets is securing the 1M in XYZ Dollars. Whereas the XYZ Dollars are actually an unsecured claim against 100K in cash and 900K in capitalized asset. Worth cents on the dollar in a XYZ Dollar to USD redemption run.

 

The good news?

If the redemption run can be met from an injection of fresh funds, the value of the capitalized asset materially improves. I give you the funds - you give me 95% of the equity; we survive the run; I get very rich and deal the company off into stronger hands. A well-worn robber baron technique.

 

SD

[TwoCitiesCapital]

50 minutes ago, SharperDingaan said:

The accounting quirk that underlies most stable coin ….

 

I give XYZ company 1M USD, they give me an unsecured note paying X% interest/year – called 1M XYZ Dollar, backed by the full faith and credit of XYZ company, and denominated in one-dollar increments. XYZ company: Debit Cash, Credit Redemption Liability.

 

In banking, if a customer deposits money and there has been no activity in the account for X years – the bank can reduce its liability (customers deposit) and credit its equity. However, the bank must then send the deposit to the nations central bank for safekeeping: debit equity, credit cash.

 

XYZ company estimates that some of the XYZ dollar will redeem within 180 days (50K, or 5%), but the remaining XYZ (950K, or 95%) will never redeem. XYZ company debits redemption liability and credits equity. The balance sheet shows 1M in cash, 50K in liability, and 950K in equity – debt/equity ratio looks spectacular!

 

XYZ puts up 100% of its unencumbered 1M in cash (T-Bills, Bonds) as security, borrows 900K and spends the money on IT development, capitalizing the entire cost (simplicity). The balance sheet shows 100K in cash, 900K in a capitalized asset, 50K in liability, and 950K in equity. The custodian will also show 1M in T-Bills and Bonds (collateralized against debt). Were you able to see the balance sheet you would see NO debt, as it is netted against the cash balance.

 

I falsely think the 1M in custodian assets is securing the 1M in XYZ Dollars. Whereas the XYZ Dollars are actually an unsecured claim against 100K in cash and 900K in capitalized asset. Worth cents on the dollar in a XYZ Dollar to USD redemption run.

 

The good news?

If the redemption run can be met from an injection of fresh funds, the value of the capitalized asset materially improves. I give you the funds - you give me 95% of the equity; we survive the run; I get very rich and deal the company off into stronger hands. A well-worn robber baron technique.

 

SD

 

So what evidence do you have that Gemini is putting USD reserves for GUSD into Treasuries and then borrowing against that? 

 

Because that's the only piece here that would make any sense as to why couldn't redeem for USD on demand. 

 

It would also be fairly damning of State Street, Signature Bank, and BPM who custody and audit the reserves if they're allowing Gemini to pledge money it doesn't own as collateral for loans for its own benefit. 

[SharperDingaan]

"It would also be fairly damning of State Street, Signature Bank, and BPM who custody and audit the reserves if they're allowing Gemini to pledge money it doesn't own as collateral for loans for its own benefit".

 

The custody banks would all be on side, as a Gemeni would be putting up unencumbered assets that it does actually own - everyday business. The generic example just used Gemini as a name example of a USD stable coin issuer. No aspersions intended.

 

SD  

[TwoCitiesCapital]

2 hours ago, SharperDingaan said:

"It would also be fairly damning of State Street, Signature Bank, and BPM who custody and audit the reserves if they're allowing Gemini to pledge money it doesn't own as collateral for loans for its own benefit".

 

The custody banks would all be on side, as a Gemeni would be putting up unencumbered assets that it does actually own - everyday business. The generic example just used Gemini as a name example of a USD stable coin issuer. No aspersions intended.

 

SD  

 

If Gemini is putting up its own unencumbered assets, and not USD reserves/treasuries held by third party custodians on behalf of depositors, than I'm still uncertain as to how you come to the conclusion that there'd be a lack of reserves against GUSD issuance.  The reserves would still be 1:1 USD:GUSD and held with the third party 

 

This is whole point of having auditors and third party custodians - to prevent the company from doing stupid shit with reserves that aren't theirs. To say Gemini could do otherwise is to say State Street and the auditor aren't doing their job. 

 

Either the reserves back GUSD or they don't. That's all that matters. Both GUSD and USDC release audited statements of their reserves and composition on a regular basis. Both use trusted third party custodians. Both hold the vast bulk of their reserves in cash equivalents. And one is issued by a regulated publicly traded company. 

 

To suggest that a bank run could occur because they could hypothetically be deceiving their custodians and auditors and pledging reserve assets they don't own as collateral for debt at the exact some time we hypothetically assume an Ethereum based CBDC is released and no one wants to own any alternative of equivalent value all seems like a massive stretch.

 

If you don't want to own them, fine. But you don't go have to go around implying malfeasance supported only by a string of hugely unlikely what-ifs as an argument against owning them. 

[SharperDingaan]

It is a very straight forward argument.

 

Coin holders believe their coin is backed 1:1 by T-Bills/Bonds.

Custodians/auditors confirm the T-Bills/Bonds exist - they are indeed owned by the company, they are indeed there, and they have been recorded in the books correctly. However, these are NOT segregated assets, verifiers are NOT confirming that coin holders have beneficial ownership of the T-Bills/Bonds.

 

The coin IS backed 1:1 - but the coin holder is an UNSECURED creditor, and the coin is backed by an illiquid capitalized asset, the company's own unpledged assets, and a small amount of T-Bills/Bonds. If there are insufficient UNPLEDGED assets and T-Bills/Bonds to meet redemptions, the coin issuer has to sell the illiquid asset - and there may NOT be a market. All else equal, over time as more money is spent on development - the illiquid capitalized asset gets bigger, and the quantity of UNPLEDGED company assets and T-Bills/Bonds gets smaller. The coin issuer is becoming a progressively riskier backer of their coin.

 

All that is required for collapse, is a sustained redemption large enough to exhaust the quantity of UNPLEDGED company assets and T-Bills/Bonds. I humbly put forward that the introduction of a US Federal Reserve backed digital USD, might trigger such a redemption.

• Why? The coin became obsolete as soon as the digital USD was introduced. Functionally, the coin solution still works - but it just doesn't have the acceptance, backing, or utility of a digital USD that can be used in/on everything. The coin users rational action is to to redeem the coin for USD, then exchange the USD for digital USD.

Different opinions around introduction of the digital dolllar and CBDC. Look outside of the US and it is pretty clear that CBDC is coming - the only question is how long until arrival.

 

Different opinions around the 'utility' of stable-coin - currency pegs are just one application. Simply segregate the T-Bills/Bonds, turn the coin into 1:10 units of the segregated assets, and you have the standard money market mutual fund at $10/unit. A fund that is materially cheaper to operate and distribute, and WITHOUT the myriad of intervening intermediaries. 

 

Different PoV.

 

SD 

 

Edited October 13, 2021 by SharperDingaan