some of these crazy things...

in crypto •  6 years ago 

Coinmarketcap.com lists 227 exchanges for the crypto space. Of course that is crazy. But there is an easy explanation. The best way to make money is of course to take money from every transaction. Something like: the best way to rob a bank is to start one. Or for that matter: the house always wins.

By now a lot of trading in crypto has a bad reputation. Pump & dump, outright manipulation... It is likely but try to prove it byond doubt! Another crazy thing are the so called stable coins. People trade with USDT as if it were USD. USDT is centralized and it might face some serious issues. Some think it is a scam and can evaporate any time. Most people do not believe there is an USD for every USDT and the system is fractional. Truth: we do not know, we have no way to check it. There seem to be around 2 billion USDT around. Suppose Tether has to cough it up. How likely is it that this is at all possible? Not surprisingly Tether fights the rumours and on its website proof of funds takes a prominent place. Not convincing to most experts but credible enough for some big enough market players, Binance being one of them.

The crazy thing about money applies. If Tether holds or not holds real USD in accounts is not relevant as long as people trade and hold USDT. It is trust in a centralized Hong Kong based company. Is such a thing more crazy than trusting fractional reserve banking? If you would call for a bankrun you end up in jail - broke. It is supposed to be your money, but banks don't have that money... What did you do with the money? Well, we gave it to Enron... Still we go on trusting that. And we are supposed to trust it even more with the war on cash making a lot of progress. Will the ATM's work tomorrow? The less they are used, the more likely they will. We have learned to accept that the money is gone and are happy with that. We accept that when we have 100.000 dollars in our account there are all kind of limitations to actually take that in cash and fly out of the country...We accept that there is an ATM withdraw limit. We take all this for normality. But it is of course not really normal...

We do not judge if tether is real, scam or something else. We do not hold tether and do not trust it. We can use it some times on Binance for example. Not to keep it, not as storage. It is a company issuing the money (USDT) and claiming to have 1 USD for every USDT somewhere on an account. However: 1 USDT is not 1 USD. It is a crypto and the conversion rules are set by company policy. (While writing this the market goes about 0.97 to the USD). Forget about USDT being the same as USD. If you hold USDT (and in many trading accounts people will) you hold a crypto currency. Nothing against that, but the market can decide to blow up USDT and will if it stops trusting it. That risk was very near in fact and we do not exactly know if it still is there.

We think that there is no need for such thing as a centralized stable coin. Some coins might be real world asset backed. Trusting that or not trusting that is up to whoever wants to use it. Maybe Maker is the best solution. It is a trustless mechanism (burning and creating trough an incentive algorithm) that keeps a DAI always more or less a dollar. Seems to work.

Stable coins, secure tokens: it is a hype. If you start to think about it, you reach the question why you want to have them. To trade? To short term parking? Just to be free from banking laws and policies? Guess most people want to use them to have quick access to trading. USDT for example can be traded within seconds while funding a trading account with USD takes some time. In most cases you have to convert to crypto and deposit from a crypto wallet. Most exchanges do not trade fiat. Most banks do not have crypto. So a crypto wallet makes sense. If you use Uphold (not a wallet as such) you can also hold real USD (and other fiat currencies) in an account, convert it instantly (within your own account) to one of the supported crypto's and send it to some receiving (crypto) address. Funding a Binance account from Uphold is quick and easy. A good intermediate solution. The only reason not to take this convenience solution is the relatively high rates for conversions Uphold charges you. The big benefit:a USD is USD in Uphold and when USDT takes a blow for one reason or another you are likely to be glad not to have taken USDT for the same thing as a USD.

Anyway: after the exchange hype we now live the stable hype. Long way from where we came. For sanity reasons people however should understand that the whole stable movement does not rest upon any necessity and that a stable coin is a crypto that is governed in another way as the fiat or commodity that backs it. If it is centralized (in some company) it means that it is subject to the legal reality of that company. Know what you believe!

  <br /><center><hr/><em>Posted from my blog with <a href='https://wordpress.org/plugins/steempress/'>SteemPress</a> : https://cryptmove.com/blog/2018/11/21/some-of-these-crazy-things/ </em><hr/></center>

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