As The Guardian noted later yesterday:
The UK has been left behind in the cryptocurrency boom and is in danger of missing a second wave of demand, according to the former chancellor George Osborne.
Osborne, who has an advisory role at the crypto exchange firm Coinbase, said the country already missed out on the first generation of crypto because the formerly sceptical US had embraced digital currencies under Donald Trump.
There are three things to note.
First, Osbrone advises a crypto firm. This comment is, then, in no way objective. It is not even news.
Second, he is supporting stablecoin. As Investopedia put it:
Stablecoins are designed to bridge the gap between the unpredictability of popular cryptocurrencies like Bitcoin (BTC) and the stability required for everyday financial transactions. By pegging their value to fiat currencies, commodities, or other financial instruments, stablecoins offer a crypto alternative with reduced volatility. As a result, they provide a more consistent medium of exchange capable of fulfilling daily transactional needs, unlike their more volatile cryptocurrency counterparts.
So, they should, then, be as existing as a debit card, except according to Osborne, they are much more important than that. Of course, that might say quite a lot about him.
Or, third, as I put it in a comment today:
A stablecoin claims one real pound (£1) = one real pound less a stablecoin handling charge (Less than £1, then).
Why do we need to embrace, let alone promote that rip off?
Answers on the back of a real £5 note, please (I jest).
I will keep saying it, and it needs to be said: stablecoin and crypto provide answers to no known questions.
We may need better bank payment systems, especially internationally, but we do not need these expensive facades for supposed assets.
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when you say we need a better international banking system what might you mean? I have been interested in understanding international markets from different perspective not just finance and this seems to be of an interesting topic.
Cryptocurrency is only an “interesting topic.” to people who:
(a) Know nothing about actual currencies
(b) Don’t give a stuff for the environmental consequences
(c) Think in some way its financial ‘innovation’ (usually politicians easily bamboozled by the technology behind crypto)
Stables are mainly used whilst on whatever chain to switch out of xyz coin, helping smooth users against price volatility, and are often backed by…bonds in the currency in question. For example USDC ‘The portfolio of the Circle Reserve Fund, which can contain short-dated US Treasuries, overnight US Treasury repurchase agreements, and cash, is custodied at The Bank of New York Mellon and is managed by BlackRock.’
You make my point.
I read that article by George Osborne, too. (… and in other news, snake-oil salesman says snake-oil is a good thing!).
Stablecoins are “private money”. If you own/use them then the best that can happen is that you can exchange them back to “real” money “one for one”… but there is always a chance that you can’t – and history is littered with examples where bad things happen. The mismatch between the assets (that back a stablecoin) and the liabilities (promise to pay real money) and the eternal temptation (to stablecoin creators) to stretch this (along with fraud, of course) means that eventually there is a “run” and things go wrong quickly. That is the lesson from history.
So, if there is no upside but a (small) chance of serious downside – why? Well, convenience and secrecy.
Convenience? As you say, make the current payments system better – indeed, the very existence of stablecoins is a damning indictment of the current banking system.
Secrecy? Well, some people don’t want transactions to be known by tax or other authorities…. but we should not be making life easy for them.
Much to agree with.
George Osbourne – is there no minimum level to which he will not stoop……………………
You wrote:
“By pegging their value to fiat currencies, commodities, or other financial instruments, stablecoins offer a crypto alternative with reduced volatility. As a result, they provide a more consistent medium of exchange capable of fulfilling daily transactional needs, unlike their more volatile cryptocurrency counterparts.”
Is this what is going on here with re-domiciling gold reserves?
https://www.msn.com/en-us/money/markets/russia-china-to-set-their-own-gold-exchanges-cut-ties-with-western-control/ar-AA1JmmfV
A comments section is probably not the right place to ask a question like that, sorry. But I haven’t seen a pick-up of the phenomenon in these sections yet.
The two are not linked.
The first paragraph is all about different types of crypto trading and using stablecoin to mitgate risks in them. My point is none of this trading is required, meaing stablecoin still answers no known question.
I wonder if any parts of the crypto mania will survive a crash?
None, bar some alternatuve uses for blockchain.
Blockchain has been, is and always will be a miserable failure. Relentless hype does not equal actual utility.
I tend to agree.
But it might gave uses. Crypto doesn’t.
I will keep saying it, and it needs to be said: stablecoin and crypto provide answers to now known questions.
should be ?
I will keep saying it, and it needs to be said: stablecoin and crypto provide answers to no known questions.
Corrected. Sorry – all done in a rush before going out birding today.
This yt is about US crypto and explains some of the ‘why’s behind it, plus very much how it’s been legally nobbled to favour the wealthy – especially Trump:
youtube.com/watch?v=MgADgDLmKTl
Max from the channel UNFTR, special for the Meidas Touch channel. If I’ve erred in the URL, the last letter may be a capital ‘i’ instead of lower case ‘L’. Or even a number ‘1’. Doing this from a different device!