I stumbled onto this about a month or so ago, and I agree that the mainstream media isn't pursuing the stablecoin aspect at all. The misleading name distracts from what to all appearances looks like an outright Ponzi scheme.https://twitter.com/jonspaihts/status/1395431954489634821 …
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Consider the closed loop of BTC -> USDT -> BTC, all ratcheting up vs. the USD (and similarly for other stablecoins and other fiat currencies). What's to stop the feedback cycle from going in the other direction and wiping out the entire market some day?
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I think what makes cryptocurrencies so insidious is that the major ones are a tulip craze, but then you have Ponzi schemes operating in the open within the tulip craze. It's almost exactly like the derivative markets that led to the 2008 crash, except we can watch them happening.
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Let's suppose everyone cashes out some "stablecoin" at the same time. Is the issuer of that coin the one who ultimately has to make good on the fiat currency that they promised they have liquidity for? They're not claiming to be operating as a fractional reserve lending bank.
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All of these DeFi startups seem to be operating in this financial and legal gray area where they can act with as little regulation as possible, while giving the appearance of offering much more than they could realistically be offering. They're claiming to have that much money.
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But it gets weirder, because there are collectives minting stablecoins who don't even pretend to really be backing them with much beyond maybe some other coins and goodwill. MakerDAO is a perfect example of this. They seem to mean well, but I'm doubtful.https://makerdao.com/en/
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I mean, I have no idea how to tell apart the starry-eyed idealists who really believe in this stuff from the people out to make a quick buck. And the idealists could in a way be worse because they actually believe in what they're doing and won't cash out until they lose it all.
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The existence of the idealists also emboldens all the layers of speculation above. It's like if Beanie Babies had had a hard core of people who truly believed they would become the world currency
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