Why is coinbase moving i to the stablecoin market?
Explain the business case to us from the perspective of coinbase.
Also what do YOU think is the effect on the ecosystem?
USDC: explain the business model?
6 years ago by knircky (73)
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The advantage of a blockchain-based digital dollar like USDC is easier to program with, to send quickly, to use in dApps, and to store locally than traditional bank account-based dollars. That’s why we think of it as an important step towards a more open financial system
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Right, but why does coinbase get involved?
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Look This is the first time Coinbase has supported a stablecoin, which is fundamentally different from other cryptocurrencies.
Unlike bitcoin or ether, a USDC is meant to represent a single US dollar (USD) that does not move up or down relative to its reference currency. One USDC is a 1:1 representation of a US dollar on the Ethereum blockchain," the company says in the press release.
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Now i think ur just a bot, since u post unrelated info that looks copied from the press release
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I just try to give you the an answer.Okay i remove last one.
Thank you
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Hi knircky,
The coin is based on ethereum and the technology behind it seems to be minimal. Essentially it is just a token that coinbase claims it will redeem at a 1:1 value for USD. It is supposed to be backed at 100% and requires you to trust coinbase.
While it may not sound too great, this actually is nothing new. All of your dollars in the coinbase account are not physical dollars. You already turst that coinbase will pay you out in 'real' dollars when requested. Coinbase dollars are in fact already a trusted asset, a certificate of debt that coinbase promises to pay.
Moving to USDC the only new part is that this promise to pay a debt is no longer in a central coinbase database, but now lives as a token on the ethereum blockchain.
The advantages of this approach are that coinbase does no longer need to keep a highly secure database and that the users get a huge freedom. They can freely transact USDC with everyone, without coinbase being able to interfere. Coinbase only promises that they will eventually redeem these tokens.
The cost to realise this new stablecoin is minimal. Even I could offer my own erc20 token and claim I will back it in physical dollars, the reason I am not doing it is just because nobody would trust me (or maybe I should start it with some friends??).
At this small cost they gain a lot of publicity, more user-freindly solutions and better security in their own system. Even without fees this seem like a good move by coinbase to me. This will almost certainly bring more users and that always means more profits.
Of course they could also try to cheat, issuing more USDC than they have dollar. But they could already try to do that without the USDC existing. Maybe it becomes a little easier now since the USDC can move to other exchanges and there will likely be a larger passive market cap than before.
Furthermore they may try to promote this now at 0% fees but later could always add a small fee to make even more profit.
I personally welcome the addition very much. I will not hold much USDC, but if binnance lists it then I can just use coinbase to convert USD to USDC, send these to binnance and then trade there.
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I think coinbase is doing this mostly to create the economy. With USD, 1 dollar = 1 dollar but with USDC, they can print it based on how much liquidity is present in the ecosystem. Kind of like how if a bank has total deposits of 1 million, it doesn't need to hold 1 million in bank vault all the time. This seems like a way to add more liquidity in the system then thr really is.
Second thing i can think of is probably how tax laws will operate in future. If you sell for dollar or if you traded one asset for another.
Mostly stable coins were created to get around the problem of bringing money into the system through banks as all exchanges can't connect to banks but for coinbase to get into this even though they have banking partners is quite weird.
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this is a sign of an impending financial event...
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I believe all of the big players in the exchange game here in the US have finally decided its time to phase out Tether from the crypto community.
If Tether had been left with little competition and the rumors surrounding their corruption were to be found true, it would be a major blow to crypto and its prices. Then finally Coinbases business as well would feel the adverse effects of all those events, since its completely dependent on the use and prices of these cryptos.
What better way to lessen the fallout from Tether being exposed and falling apart?? Create your own Stable coin and convince people to move from Tether to your (fee-less) stablecoin which is run by one of the most regulated Exchanges in the world.
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Interesting. Just not sure if this is enough for cb to decide to go i to the space. I feel like there must be a bigger reason and business incentive
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indeed they have been planning this for a while, and look how this news happens to be right after The FUD about Tether. It will be interesting to see how this pans out.
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The introduction of USDC stablecoin into the ecosystem can erase the risk of decentralized currency price fluctuation as it will be representing the US dollar and will most probably not show much shift from original dollar price.
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First, I think they want to provide an alternative to the dominant but controversial Tether. This will help bring confidence to the stability of counterparties that hold stablecoin throughout the global ecosystem of cryptocurrencies.
Second, I think they want to expand their listed assets slowly but bringing a stablecoin will permit them to attract crypto into their wallets instead of fiat. Most investors were using coinbase to buy into BTC only to transfer to the likes of Binance for access to other coins. Now, as they expand their assets listing, they want to attract crypto to their wallets and a good and liquid stablecoin could help.
Lastly, I think they want to leverage the technology of quick settlement instead of the traditional fiat banking system that is slower and more expensive.
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Looking at it from a simplistic standpoint, the CEO holds a fair amount of Ethereum, more than Bitcoin even. It could be why Coinbase is doing things like adding ZRX which also runs on Ethereum. It could all be as simple as they have Ethereum and want to make more money on it.
The other theory I touched on yesterday on your other post. Still working on filling in details there though.
https://www.ccn.com/why-ceos-of-circle-coinbase-and-major-crypto-firms-are-bullish-on-ethereum/
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They could try to manipulate Bitcoin price like Bitfinex did with Tether:
https://cryptoslate.com/bitcoin-price-manipulation-study-suggests-2-5-billion-tether-used-to-create-artificial-btc-demand/
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How? They cant print the token unless they have the actual usd.
So they cant manipulate. If they can please explain how?
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moving into the stablecoin market makes it so that your platform is able to issue a currency that can be sent to other exchanges or held on any erc20 wallet. this makes your product versatile and allows users the chance to escape volatility.
Making a stablecoin also gives coinbase access to the potential userbase that will come from goldman Sachs when they begin seriously sending investors over to crypto. They are trying to position themselves in a spot to no only be the go to retail investor spot but also serve the coming Institutional investments that are"rumored".
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