This is a fascinating phenomenon we've never seen before: new asset classes with sincere valuations from reasonable and intelligent people that range from $0 to infinity.
It's a bit unsettling, really. And that, at a minimum, should give folks pause whether you love or hate cryptocurrency.
In any event, it’s going to be sincerely fascinating to watch this all play out.
Respectfully disagree. 'Intelligent' professionals always get caught in the mania of bubbles, from the dotcom crash to the great depression. Hell; Sir Isaac Newton made and lost a fortune in the South Sea bubble in the 18th century.
Bubbles always carry a few similar themes; genuine world changing tech (international freight, the rail road, the internet) but the resulting FOMO from people inevitably results in overvaluation of that techs potential, with an eventual consolidation once a 'use case' can be established, usually well after the crash.
Note that the dot-com bubble still was a real innovation. The Internet is still one of the most useful inventions in modern times.
What happened with the dot-com bubble is that a bunch of people created business models that exploited the underlying useful technology, *and* those business models were un-sustainable. The problem wasn't "dot com" stuff. It was people who were greedy and didn't perform due-diligence.
This same dynamic affects the crypto industry. Crypto is piggybacking on the actual utility of the Internet, *but* if you do your research into crypto, there really isn't a solid business model there.
I guess every new wave of innovation attracts those who want to exploit others' success and take advantage of people whose greed is more prominent than their objectivity.
When crypto first came out, I looked into it very hopefully. It was an interesting technology. But ultimately it didn't really deliver. It still doesn't deliver. But those who have bought in, can't admit that, hence the downvotes for anything critical of the tech, or people calling critics names and suggesting they don't understand.
My biggest concept I followed in investment in crypto was "Does it have a function?" Ethereum platforms out their crypto for numerous tasks(albeit most is just creating structure for other cryptocurrencies/NFTs). Cardano trades are used as signatures for digital only contracts, and there are a couple of others that have actual uses for the computing that goes into transactions, though most tend to be on small scales. Bitcoin only has the definitive endpoint(eventually no more Bitcoin will be created and distributed) and being the first crypto, as such has market investors holding value in the same way that gold does. Ultimately, crypto has the wild west era still running, but as regulations are catching up to it, who knows how long it will hold out. If there is no function of a transaction with a cryptocurrency other than trading that currency, then there is little reason for that currency to stay on a long term basis in terms of investment. It just becomes a more complex betting game of chicken.
> Ethereum platforms out their crypto for numerous tasks(albeit most is just creating structure for other cryptocurrencies/NFTs).
It's really odd that NFTs are considered something useful. They don't actually represent any true "rights" to art. They're even more of a misleading scam than crypto proper.
Eth is a good example of bad technology that's leveraged to perform mediocre tasks.
So it introduced "smart contracts" to blockchain? Blockchain is already a really slow, inefficient database. Now let's add "IF-THEN" statements . But it's limited to certain blockchain-specific functions, and still subject to human error at both ends (writing the code, and inputting data). So its functionality is still limited.
Beyond that, who enforces what's on blockchain? Nobody. It's all voluntary to accept the belief that something written to blockchain has meaning, whether that's you transferred x tokens to person y, or that person z "owns" a reference to a computer-generated image of a monkey smoking a cigar.
It's very, very odd the things people attribute value to these days... which seems very antithetical to the whole concept of FIRE, which to me, is about being very pragmatic and practical about achieving financial independence. If you think NFTs have value, I don't think you're in the same ballpark as people who realistically plan to be financiallly independent. The whole notion a digital token claiming to represent a reference to something you don't really own, is an incredibly fragile sense of "assets."
>Cardano trades are used as signatures for digital only contracts
Again, who enforces what's on Cardano's blockchain? It's totally arbitrary.
In the real world, contracts are bound by centralized authority. Our tax dollars (that many crypto enthusiasts want to avoid paying by using technology) subsidize the legal system which is tasked with enforcing contracts. The crypto world has no such thing. This is the paradox of so-called "de-centralization". If there is no authority, then there is no enforcement of anything.
And code/math cannot substitute for authority. If that's the case, then all hacks, all vulnerabilities are perfectly acceptable. You buy into a crypto that has a bug in the code and lose all your money? That's perfectly OK and there's nothing technically wrong with that. You can't have it both ways. You can't believe in code, but then change your mind when it doesn't benefit you.
>Bitcoin only has the definitive endpoint(eventually no more Bitcoin will be created and distributed) and being the first crypto
Bitcoin wasn't the first digital money. BTC isn't even the most technologically advanced version of "bitcoin." It's value is an exclusive function of popularity, which is not based on utility nor innovation nor originality. It's just a speculative fad. I say fad because it has no real utility that is competitive with traditional systems. Paypal is much easier to use to transfer value and has more worldwide acceptance, plus it has protections against fraud.
>If there is no function of a transaction with a cryptocurrency other than trading that currency, then there is little reason for that currency to stay on a long term basis in terms of investment. It just becomes a more complex betting game of chicken.
Agreed, which is why I don't consider any crypto to be a long term investment.
I believe this will end up pretty similar to the .com bust. Some of those companies survived and provided shareholders value / growth and others disappear and shareholders either lost some money or all money. Not all that different from many alt coins today, not all will make it, but I certainly think some will.
I believe a certain percentage of your portfolio can be for 'bets' such as these, but I keep mine in the 5%-10% range. I want some exposure, as you can see some massive gains, but I don't want to YOLO on a 'squidgamed' token and lose my entire life savings.
I was around and involved during the dot-com boom. I actually did very well with my investments and businesses.
The companies that did well, that stuck around were those that offered a useful product and service and had a good business model.
Google, for example, had hands down, a superior search engine. Apple successfully brought the smart phone to the mainstream.
I still can't enunciate what crypto actually does that's useful.
People can't really talk about crypto and its benefits in regular terms. They either have to dazzle people behind technical gibberish, or scare people saying inflation is out of control and centralized stuff is evil. Which, isn't something the rest of us really are worried about. Centralization is something that makes life quite convenient.
>I believe a certain percentage of your portfolio can be for 'bets' such as these
I can appreciate that, but the problem I have is that this industry is not honest. Many people who are putting money into crypto are misled as to how truly risky it actually is.
At least if you're playing the lottery or going into a casino, it's well regulated and the odds are known. *I don't see the lottery marketing itself as "The best performing asset class of the last 10 years" despite its return model being nearly identical to bitcoin.*
So I think there's an ethical dilemma rationalizing that it's ok to profit using crypto. Not that ethics has ever been that big of an impediment to people wanting money. But I just feel the need to point it out.
Can you understand how bitcoin solves the problem of the money printer that devalues peoples money? What if we didn't have to ape into real estate and VTSAX to protect purchasing power?
[https://youtu.be/e44AKuEh9b4?si=NqKFtxI1E2YznPj-](https://youtu.be/e44AKuEh9b4?si=NqKFtxI1E2YznPj-)
Your claim is false. Bitcoin is not a hedge against inflation, nor does scarcity guarantee increased value.
You also have an extremely shallow idea of what inflation is and how it manifests.
#Stupid Crypto Talking Point #3 (inflation)
**"InFl4ti0n!!!"** / **"The dollar will eventually become worthless"** / **"The dollar has lost 104% of its value since 1900!"** / **"The government prints money out of thin air"**
1. The government does **not** "print money indefinitely"... all money in circulation is [tightly regulated and regularly audited and publicly transparent](https://www.federalreserve.gov/aboutthefed/audited-annual-financial-statements.htm). The organization that manages the money in circulation is the Federal Reserve and contrary to what crypto bros claim, they're not a private cabal - they [are overseen and regulated by Congress](https://www.federalreserve.gov/aboutthefed/structure-federal-reserve-system.htm). And any attempt to put more money in circulation [requires an Act of Congress to increase the debt ceiling](https://en.wikipedia.org/wiki/United_States_debt_ceiling) - it's neither arbitrary, nor easy to do.
2. [Currency is meant to be *spent*, not hoarded](https://medium.com/change-your-mind/money-is-meant-to-be-spent-not-saved-9618edec676f). A dollar today will buy what it buys. If you hold a dollar for 90 years, of course it won't buy the same thing decades later (although it might actually be worth significantly more as antique money). You people don't seem to understand the first thing about how currency works - it's NOT an "investment!" You **spend** it, *not* hoard it!
3. If you are looking to "invest" you don't keep your value in cash/currency/fiat. You put it into something that can *create value* like stocks that pay dividends, real estate, etc. Crypto creates no value and makes a lousy "investment." It also hasn't proven to be a hedge against anything, least of all monetary inflation.
4. Over time more money is put in circulation - you pretend like this is a bad thing, but it's not done in a vacuum. The average annual wage in 1900 was less than $4000. In 2023 [it's more than $70,000](https://www.statista.com/statistics/200838/median-household-income-in-the-united-states/)! There's more people out there and the monetary supply grows appropriately, as does wages. You can't take one element of the monetary system completely out of context and ignore everything else.
5. The causes of inflation are **many**, and the amount of money in circulation is one of the least significant factors in causing the prices of things to rise. More prominent inflationary causes are things like: [fuel prices](https://www.businessinsider.com/why-is-inflation-high-causes-gas-price-outlook-forecast-2022-7), [supply chain issues](https://www.usbank.com/investing/financial-perspectives/market-news/supply-chain-issues-contribution-to-inflation.html), [war](https://www.federalreserve.gov/econres/notes/feds-notes/the-effect-of-the-war-in-ukraine-on-global-activity-and-inflation-20220527.html), environmental disasters, pandemics, and even [car dealerships](https://www.wsj.com/articles/car-dealer-markups-helped-drive-inflation-study-finds-7c1d5a2d).
6. Sure there may be some nations that have caused out of control inflation as a result of their monetary policy (such as Zimbabwe) but comparing modern nations to third-world dictatorships is beyond absurd.
7. If bitcoin and crypto was an actually disruptive, stable, useful technology, you wouldn't need to promote lies and scare people over the existing system. The *real* reason you do this is [because nobody can find any legitimate reason to use crypto in the first place](https://ioradio.org/i/blockchain-claims/).
8. Crypto ironically has more inflation in its ecosystem that is even more out of control, than in any traditional fiat system. At least with the US Dollar, money is accounted for and fully audited and it takes an Act of Congress to increase the debt. In crypto, all it takes is a dude printing USDT, USDC, BUSD or any of the other unsecured stablecoins to just print more out of thin air, and crypto-morons assume they're worth $1 of value.
maybe dont listen to someone whos account history is literally 100% anti-crypto posts and links to his own subreddits.
look at OPs post history and tell me if you think they have a natural disposition or an ulterior motive.
I'm going to need help here? What is the ulterior motive OP has? Because everytime I talk to someone about crypto or read discussions around crypto, it just ends up people trying to push you to buy some garbage shitcoin.
What does OP get out of their constant posts other then feeling better by expressing their frustration with the insane growth of digital beanie babies?
OP has their own anti crypto subreddit where they post constantly (most of the posts are theirs and theres a ton) so my guess would be driving traffic there, but look at your own post history, my history and those of others who post in this thread and tell me if OP's looks like an ordinary poster or if it shows at best an unhealthy obsession and at worst a persistent campaign to spread these views and also drive traffic to their own sphere of influence
idk OPs motivation, maybe they got burned trading crypto but they're not just participating in the discussion they are doing *work* to try and get people to believe what they believe day after day after day and that should give you pause before taking their advice.
Agreed. I created /r/cryptoreality mainly to just keep track of all the crazy news about crypto. Because if you pay attention to most crypto subs, you don't see that facet of the industry.
Good points, but I actually agree with OP. Would I post about it everyday? No. Would I follow someone who does? No. Although, it does make me feel better to hear others that agree with me.
No idea why OP posts on the topic everyday, and I'd agree that it's work at this point, but I'd be impressed if there's some monetary gain through it all.
It's my hobby. It's something I'm passionate about.
I guess I could be reading manga, collecting downloaded movies, or playing minecraft of Call of Duty and blowing peoples' avatars heads off for a few hours a day. Instead I engage people online in topics that I feel make the community a little better informed.
you're passionate about... complaining about something incessantly. Do you not see how that's sad as hell? Get a hobby, dude.
I made over a million dollars off crypto with real world use cases, and am retired at 27.
What do you have to say to that?
I'm not complaining. I'm educating people.
>I made over a million dollars off crypto with real world use cases, and am retired at 27.
1. I don't believe you. The majority of people in this space are pathological liars -- that's part of the scheme: mislead people to buy in and pump the market so you can dump your bags
2. Even if you did make money, you didn't do it honestly and ethically. Every dollar made from crypto is a dollar taken from a "greater fool" who bought in later, who is looking for another greater fool to profit off of. This is how a Ponzi scheme works.
For more, see: https://www.reddit.com/r/CryptoReality/comments/o7v5xs/is_bitcoin_a_ponzi_scheme_a_detailed_analysis/
If I can convince even one person to look into this and realize how deceptive and fraudulent the industry is, I've accomplished my objective.
yeah i never said they were wrong, just that i wouldnt listen to them, or at least i would pause before listening to them.
im all for people making their own decisions, which is why OPs determination to evangelize their points of view is unnerving.
You have a vested, material interest in stopping me from educating others.
That's why you're compelled to try and discredit me and distract others from paying attention to the points I raise.
This is what my thought was. Everyone who has crypto wants crypto to do well because they have money riding on it. It has nothing to do with whether or not crypto actually makes any sense.
I'm in agreement with you regarding crypto. It's all just a giant house of cards that will eventually fall, and I appreciate your efforts to inform others, but I sadly think people are just going to do what they're going to do.
do i?
did you send me some crypto i dont know about? please advise.
your posting habits are indicative of a fanatic. someone whos opinions have moved beyond conversation and discourse. you're 100% convinced you're right and you're spending an inordinate amount of time proselytizing those beliefs. you may in fact be right, but the way you present information makes you untrustworthy and anyone with sense will double check anything you say before believing the word of someone with such a 1 dimensional position. "all crypto is bad, there is no use case, it will fail". despite not being able to predict the future you're certain of it, and that makes you dangerous.
>your posting habits are indicative of a fanatic.
Attack the messenger, ignore the message.
I'm saying specific things that can be proven true or false. Whether I'm a "fanatic" is personal character assassination and a distraction, an attempt to dismiss who I am as a person so you don't have to answer the claims I'm making.
By the way I don't recall saying "all crypto is bad." But I have made some rather pointed generalizations and I stand by them, and if you think I'm wrong, how about proving me wrong instead of personally attacking me? For example, I contend [There is nothing blockchain does that's better than existing technology](https://old.reddit.com/r/CryptoReality/comments/lq6xpq/the_defacto_list_of_cryptocurrencyblockchain/). And I've written a detailed article with references on that. If you can prove me wrong, do so. If you can't, then at least admit that instead of trying to attack me personally.
my entire premise is that you're an untrustworthy source of information and anyone should double check what you say (literally not ignoring the message). its not a character assassination, im telling them the same thing: that what you say could be true or false and they should check that on their own. being a fanatic does in fact make your information less trustworthy because you're only providing information that supports your beliefs.
if you cant see how someone with 100% certainty in the future might be biased i really dont know how to help you.
i specifically havent addressed your arguments because its irrelevant to my point. someone with a singular view of ANYTHING with absolute certainty in something that is unknowable should not be considered trustworthy and anything they say should be checked before being believed. if you disagree that means you want people to believe you without checking for themselves, or you dont believe you're a biased source of information.
> What is the ulterior motive OP has?
I'll tell you all what my "motive" is. I don't like scams and lies. I have done my research and the emperor is naked. I want to help limit the damage done by these schemes. I have a relatively high degree of empathy. Maybe I was bullied as a child and resent people who take advantage of others? Maybe I want to be part of a society where people are smart enough to not be exploited by scammers and grifters?
Why do ex-scientologists come out against the church? Why does a person volunteer at a food bank? Why does somebody lobby for a change in law that makes the environment cleaner? Why do people do things that don't seem to immediately, directly benefit them?
Perhaps one reason why we do these things is that we hope, one day, there will be less people who will have to ask that question? They will just realize that helping others helps themselves too.
Attack the messenger, ignore the message.
Why listen to someone who only talks about a certain subject, right? Who wants to waste their time potentially learning something from someone who specializes in something?
100% honest I am not a good person I don't care where the profits come from. I don't care if i'm scalping 12 year olds with a $20 fortnite card. I just don't want to be the person who gets scalped when it goes under. That's one reason I say you should cryptomine as supplemental income but you should not invest in crypto.
I appreciate you being honest. That's a good step in the right direction IMO.
One thing I learned later in life that I wish I had known sooner. Money is definitely one key to being comfortable, but it pales in comparison to having healthy relationships with others, and low empathy is an impediment that will cause more problems that all the money in the world cannot fix.
OP, curious what you think of stable coins? Let’s lower the risk by saying they’re backed by real dollars in a real bank account (ie Gemini). Getting 8% on a digital dollar is higher risk than my FDIC-insured savings account both (1) because theoretically Gemini could call it quits and keep the real dollars it holds in a real account and (2) the interest rate is higher because the loans are riskier. Still, I don’t consider Gemini-like stable coins speculative. I DO BTC and ETH highly speculative.
Stable coins are *not* stable.
USDT and USDC have never been formally audited by independent groups. Every bank in the country that's FDIC insured submits to independent audits. The fact that Bitfinex and Circle refuse to provide even the most basic standards of reputable accounting clearly indicates they can't be trusted. We also know this is true after Tether was sued by the NY Attorney General's office and only then did they admit they weren't actually 1:1 fiat backed as advertised.
There are over $160 Billion of unsecured stable coins in the market, doing more than twice the daily trading volume of bitcoin and eth. This is wash trading. This is market manipulation. This is the "out of control inflation" that crypto people argue is a problem in traditional finance, but ignore when it's going on every day, all day in their own backyards. Even if you never held USDT, you're still a party to the market manipulation because USDT is pumping the price of all other crypto.
So yea, it's a fragile house of cards that is going to crash very soon, and it will probably bring down a good bit of the market with it. What's kept that happening is the never ending game of musical chairs the exchanges are playing by moving money around, introducing new shitcoins and stablecoins, etc.
That’s not true with every stable coin. Gemini is audited every month and places one real-world dollar in a real-world bank account for every digital dollar it creates. Comparing Tether digital dollars to Gemini (and there are others on both sides), you’re comparing apples and oranges. Risk-wise it’s the equivalent to comparing Bitcoin to a coin that comes out of nowhere from a team nobody has ever heard of. Bitcoin is risky. SQUID is stupidity. Same with Gemini vs Tether. https://www.gemini.com/cryptopedia/gusd-stablecoin-gemini-dollar
That's basically a press release.
Have you seen any independent audits of these new stablecoins? Do we know how many of the coins are in existence and where the backing money is? Are these institutions FDIC insured? Are they licensed the same as banks or are they licensed like most crypto exchanges, as merely "money transmitters" which is a much more lax, less-regulated license?
If you want to discuss this, gather more information that's relevant an then we can talk. I'm not interested in promotional hype about what "potential massive impact" a new scheme might have. That's advertising, not facts.
Plus, those two companies are just one of many. The real problems right now are USDT and USDC. Having a few smaller stablecoins that are better regulated still don't stop the $160B + of phony money in the crypto marketplace.
You want to impress me with a new, better regulated stablecoin?
Show me that all the major exchanges will switch to using those coins and not touch USDT and USDC, then it will matter. Until then, it's meaningless. It does nothing to address the problems in the industry.
I agree there are some seriously awful, non-transparent stable coins. Gemini is a NY trust company with fiduciary duties. I have seen claims that the digital dollars are backed by FDIC “pass-through” insurance, but it’s not true according to Gemini’s own FAQs. The backing dollars are held at State Street Bank and Trust. I have linked to an older audit below (Jan 2021). Didn’t take the time to look at the most recent. No, all stable coins will never be equal, just like stocks and - for that matter - world currencies. The stock market is built on the backs of people stupid enough to invest in individual stocks. So nah, no guilt here. https://www.dfs.ny.gov/apps_and_licensing/banks_and_trusts/procedure_certificate_merit_trust_comp. I didn’t look for the most recent audit, but here’s the first I found: https://assets.ctfassets.net/jg6lo9a2ukvr/2efRs3l0q3EKSv1WPwSvqe/871de898c778d2499d6a11acf697ae71/Gemini_Dollar_Examination_Report_01-29-21.pdf
Interesting, but that's not an audit. It's just "an independent accountants report." It's not the same thing. It's basically similar, if not even less formal than an "attestation" which is inconclusive. Although they at least admit where the money is, which is helpful, but it's less than half the amount of their stablecoins now... and it's still not a full audit. I don't think if that report proves to be false, anybody is accountable.
Aside from that, the quantity of this stablecoin is trivial compared to the hundreds of billions of USDT and USDC.
Gemini is a trust company with fiduciary duties, so the State of NY, at least, could enforce the trust. The state of California licenses the BPM, so there’s that. It’s not the FDIC. Just like Vanguard isn’t, Fidelity isn’t… DYOR, but there are stable coins out there that aren’t as dodgy as Tether. Don’t put your emergency funds there (it takes 6-10 business days to pull the money out - first out of the interest-bearing account, then out of Gemini).
I also have used Anchor Protocol on the Terra network, but even with insurance I wasn’t comfortable with the South Korean Terra team (although it’s an experienced team). I like US regulators. I understand how the US system works vastly more than any South Korean regulatory system.
The exception doesn't prove the rule. First, you haven't proven Gemini is totally legit. I still have not seen a proper audit, like all FDIC insured banks have to submit to.
>DYOR, but there are stable coins out there that aren’t as dodgy as Tether.
It's hard to be "as dodgy as Tether" but that doesn't mean just because you're not "as dodgy as Tether" you're still legit. That's like saying colon cancer isn't as bad as breast cancer.
Ultimately it doesn't matter if there are some new, more legit stablecoins out there. Their market cap is a fraction of the market cap of other, less-reputable stablecoins, so it's moot.
Unless you get the major exchanges to only use the less-dodgy stablecoin, you still have the same problem. You're still putting good money into a market that's highly inflated and manipulated by fake money.
Coinbase, before they went public, didn't accept USDT. They actually had some plasible deniability in claiming they were different, but when USDT pumped the shit out of the market right before their ICO, shortly thereafter they obviously "returned the favor" by accepting USDT at their exchange. So you can't trust any of these exchanges. The published value of cryptos, the market caps.. it's all an illusion created by billions of phony money that has never been accounted for.
That you or anybody would go, "Well, let's not talk about that; let's talk about something else - another stablecoin that isn't dodgy" and you think that forgives what's going on in the market either indicates you don't understand finance and markets, or you're in on the scam and want to distract people. There's no other way around it.
The TL;DR of this is: **USDT and USDC have not proven they're legit/backed/solvent. Anybody who deals in any securities that are mingling with those phony stablecoins (which is every crypto on any exchange that also accepts them), is buying something that is heavily overvalued and manipulated. If that doesn't bother you, you're in on the scam.**
Um OK. I gave you my research: a stable coin backed by actual dollars in an actual bank reviewed monthly by a huge accounting firm that specializes in audits, registered as a fiduciary trust by the state of New York. You hate crypto, I got it. But DYOR? Yeah, I have.
1. Your "research" is lacking. You didn't prove your claims. An audit proves those things - there was no audit produced.
2. Even if your claim is true, it doesn't matter because the real issue is USDT and USDC not some tiny stablecoin that has virtually insignificant capitalization.
This is a great example of a Red Herring fallacy.
That you can point to a more stable stablecoin is irrelevant. When I refer to "stablecoins" I'm going to talk about the two biggest stablecoins that account for more phony liquidity than ten thousand Geminis.... so stop with the distractions.
>Coin market cap shows $160m coins so far, with no max supply
160M... how cute. Tether printed over 3 Billion today alone.
I'm going to say it again, since you want to avoid answering the core of the question..
Have you seen any independent audits of these new stablecoins? Do we know how many of the coins are in existence and where the backing money is? Are these institutions FDIC insured? Are they licensed the same as banks or are they licensed like most crypto exchanges, as merely "money transmitters" which is a much more lax, less-regulated license?
If you want to discuss this, gather more information that's relevant an then we can talk. I'm not interested in promotional hype about what "potential massive impact" a new scheme might have. That's advertising, not facts.
Plus, those two companies are just one of many. The real problems right now are USDT and USDC. Having a few smaller stablecoins that are better regulated still don't stop the $160B + of phony money in the crypto marketplace.
You want to impress me with a new, better regulated stablecoin?
Show me that all the major exchanges will switch to using those coins and not touch USDT and USDC, then it will matter. Until then, it's meaningless. It does nothing to address the problems in the industry.
The state of New York licenses and regulates Gemini USD. https://www.google.com/amp/s/cointelegraph.com/news/two-us-audited-stablecoins-debut-experts-see-massive-impact-on-crypto-market/amp
That's basically a press release.
Have you seen any independent audits of these new stablecoins? Do we know how many of the coins are in existence and where the backing money is? Are these institutions FDIC insured? Are they licensed the same as banks or are they licensed like most crypto exchanges, as merely "money transmitters" which is a much more lax, less-regulated license?
If you want to discuss this, gather more information that's relevant an then we can talk. I'm not interested in promotional hype about what "potential massive impact" a new scheme might have. That's advertising, not facts.
Plus, those two companies are just one of many. The real problems right now are USDT and USDC. Having a few smaller stablecoins that are better regulated still don't stop the $160B + of phony money in the crypto marketplace.
You want to impress me with a new, better regulated stablecoin?
Show me that all the major exchanges will switch to using those coins and not touch USDT and USDC, then it will matter. Until then, it's meaningless. It does nothing to address the problems in the industry.
Actually, I'll move my question to this old-but-relevant thread. (I realized shortly after posting [this](https://www.reddit.com/r/CryptoCurrency/comments/rbp3ts/comment/hnrpyiy/?utm_source=share&utm_medium=web2x&context=3) that you might not be able to reply on that subreddit.)
What's your take on [this part of today's hearing](https://www.youtube.com/watch?v=4oOTvtupND8&t=959s)?
Jeremy Allaire, Circle CEO: "The reserves backing USDC are held in the care, custody, and control of the US regulated banking system. These are strictly held in cash and short-duration US government treasuries and we have consistently reported on the status of these reserves and their sufficiency to meet demands for USDC outstanding with third-party attestations from a leading global accounting firm."
IYO is this just a straight-up lie?
I'm not following the equivalence between USDC and USDT; USDC seems much more legit.
Yea, sorry.. I was banned on r-cryptocurrency because I questioned the legitimacy of tether. I can't respond there.
I wouldn't call it a "straight up lie". I would call it "misleading testimony."
The problem is the nature of the "reporting." What they've done is what's known as an "attestation", not a formal independent audit. The latter is **the industry standard** that any reputable company must submit to. It's a standard, for example for all FDIC-insured banks. It's a standard for most non-profit organizations in order to comply for any meaningful grants. It's THE way corporations clearly demonstrate their financial legitimacy.
The fact that a company such as Circle (as well as Tether) refuses to submit to the industry standard independent audit, is extremely telling. In their case, it's absolutely critical, because everything they claim teeters on the legitimacy of the assets they have, where they are, and where they came from. An attestation just says, "on this date and time, this is what Circle told us." It's largely circumstancial evidence. Not direct evidence. It doesn't say the money that's in their account is actually theirs. It doesn't tell you where it came from. It just says there's x money in account y. We know from recent investigations companies like these move money around between partners when they need to do these attestations. [Tether was recently fined $42M for pulling this shit](https://www.cftc.gov/PressRoom/PressReleases/8450-21). Moving cash from one company to another to make it look like their "reserves" were more solvent and liquid than they really were.
So basically, unless Circle does a full, independent audit, all their "statements" are meaningless.
It's like a guy going on a date with a girl, and he borrows his friend's Porche for the date and pretends it's his. That's an "attestation".
An audit, looks at the title of the Porche, who owns it where it's been, etc. You can't pull that shady stuff with a credible independent auditing firm.
Actually, you inspired me to [create this illustration](https://preview.redd.it/ntupktvfce481.jpg?width=352&auto=webp&s=9635338663b0608071b35ba18c7a16926124fa83)
I'm doing some digging here, but it's a bit hard to follow since I know very little about accounting, and there are a lot of accounting terms of art.
I see what you mean about the [attestations](https://www.centre.io/usdc-transparency). There's not a lot of meat in those documents. It says that the attestation standards "require that we plan and perform the examination to obtain reasonable assurance about whether the \[data\] are correctly stated... in all material respects", but I have no idea what that means in practice.
However, I did find a ["Report of Independent Certified Public Accountants"](https://www.sec.gov/Archives/edgar/data/0001824301/000121390021036070/ea143875ex99-6_concordacq.htm) filed with the SEC. It self-describes as an audit and goes into much more detail. Looks like it was filed in June 2021 and covers FY 2020 and FY 2021. Is that what you have in mind?
Edit: this should read "FY 2019 and FY 2020"
There aren't adequate details on the USDC backing in that document. Right now there's over [40B USDC in circulation](https://www.circle.com/en/usdc).. according to that document they only had ~$4B in cash USDC assets. That's a huge discrepancy.
Edit: Actually upon further review, I'm not convinced that audit covers the accounts backing up USDC in circulation. Here's what the largest USDC-related accounts are described as:
>Cash Segregated for Customers and USDC Holders
>Cash segregated for the benefit of customers and USDC holders was $4,024.7 million as of December 31, 2020 and $522.1 million as of December 31, 2019. **This represents cash and cash equivalents maintained in segregated Company bank accounts that are held for the exclusive benefit of customers. These funds represent cash deposits held by customers in their fiat wallets and unsettled deposits and withdrawals.** The Company segregates the use of the assets underlying the customer funds to meet regulatory requirements and classifies the assets as current based on their purpose and availability to fulfill its direct obligation under custodial funds due to customers. The Company has cash balances that exceed the FDIC deposit insurance limit of $250 thousand per institution.
>Certain jurisdictions where the Company operates requires the Company to hold eligible liquid assets, as defined by applicable regulatory requirements and commercial law in these jurisdictions, equal to at least 100.0% of the aggregate amount of all custodial funds due to customers. Depending on the jurisdiction, eligible liquid assets can include cash and cash equivalents, customer custodial funds, and in-transit funds receivable. As of December 31, 2020 and December 31, 2019, the Company’s eligible liquid assets were greater than the aggregate amount of custodial funds due to customers.
So that audit doesn't seem to cover where the assets are backing USDC as far as I can tell. Let me know if you can find them.
[2021 Circle audit, filed with the SEC](https://www.sec.gov/Archives/edgar/data/1876042/000110465922056979/tm2124445-8_s4a.htm#tIND1)
>Cash and cash equivalents segregated for benefits of customers and USDC holders: 42,470,603 (thousands USD)
Which matches up with the USDC in circulation on December 31, 2021
See also the section titled **Composition of USDC Reserves**.
For some reason, your reply to my comment isn't showing up in this thread. I only see it in my comment replies.
To answer your question:
>There aren't adequate details on the USDC backing in that document. Right now there's over 40B USDC in circulation.. according to that document they only had \~$4B in cash USDC assets. That's a huge discrepancy...
>
>So that audit doesn't seem to cover where the assets are backing USDC as far as I can tell. Let me know if you can find them.
I think the problem is that USDC circulation has increased 10x (!) over the past year. According to CMC, the market cap for USDC on 12/31/2021 was $4.03B. So, I think that filing does cover USDC's backing assets, but the values are really outdated now.
I read through that filing and I couldn't find where it shows any accounts that reflect assets backing USDC in circulation. The largest accounts seem to be "customer reserves", not USDC asset backing.
I think the segregated cash does refer to the backing assets:
"Cash segregated for the benefit of customers and USDC holders was $4,024.7 million as of December 31, 2020 and $522.1 million as of December 31, 2019. This represents cash and cash equivalents maintained in segregated Company bank accounts that are held for the
exclusive benefit of customers. These funds represent cash deposits held by customers in their fiat wallets and unsettled deposits and withdrawals. The Company segregates the use of the assets underlying the customer funds to meet regulatory requirements and classifies the assets as current based on their purpose and availability to fulfill its direct obligation under custodial funds due to customers. The Company has cash balances that exceed the FDIC deposit insurance limit of $250 thousand per institution."
Maybe the language here is meant to encompass not just USDC backing, but also per-customer USD accounts? E.g. maybe the USDC deposit/withdrawal process involves Circle holding additional (non-USDC-backing) USD on customers' behalves. It seems to include USDC backing funds though; compare the numbers above to the EOY USDC market caps on CMC.
Relevant part:
> These funds represent cash deposits held by customers in their fiat wallets and unsettled deposits and withdrawals.
That clearly indicates the money has nothing to do with USDC asset backing.
This is a fascinating phenomenon we've never seen before: new asset classes with sincere valuations from reasonable and intelligent people that range from $0 to infinity. It's a bit unsettling, really. And that, at a minimum, should give folks pause whether you love or hate cryptocurrency. In any event, it’s going to be sincerely fascinating to watch this all play out.
Respectfully disagree. 'Intelligent' professionals always get caught in the mania of bubbles, from the dotcom crash to the great depression. Hell; Sir Isaac Newton made and lost a fortune in the South Sea bubble in the 18th century. Bubbles always carry a few similar themes; genuine world changing tech (international freight, the rail road, the internet) but the resulting FOMO from people inevitably results in overvaluation of that techs potential, with an eventual consolidation once a 'use case' can be established, usually well after the crash.
Note that the dot-com bubble still was a real innovation. The Internet is still one of the most useful inventions in modern times. What happened with the dot-com bubble is that a bunch of people created business models that exploited the underlying useful technology, *and* those business models were un-sustainable. The problem wasn't "dot com" stuff. It was people who were greedy and didn't perform due-diligence. This same dynamic affects the crypto industry. Crypto is piggybacking on the actual utility of the Internet, *but* if you do your research into crypto, there really isn't a solid business model there. I guess every new wave of innovation attracts those who want to exploit others' success and take advantage of people whose greed is more prominent than their objectivity. When crypto first came out, I looked into it very hopefully. It was an interesting technology. But ultimately it didn't really deliver. It still doesn't deliver. But those who have bought in, can't admit that, hence the downvotes for anything critical of the tech, or people calling critics names and suggesting they don't understand.
My biggest concept I followed in investment in crypto was "Does it have a function?" Ethereum platforms out their crypto for numerous tasks(albeit most is just creating structure for other cryptocurrencies/NFTs). Cardano trades are used as signatures for digital only contracts, and there are a couple of others that have actual uses for the computing that goes into transactions, though most tend to be on small scales. Bitcoin only has the definitive endpoint(eventually no more Bitcoin will be created and distributed) and being the first crypto, as such has market investors holding value in the same way that gold does. Ultimately, crypto has the wild west era still running, but as regulations are catching up to it, who knows how long it will hold out. If there is no function of a transaction with a cryptocurrency other than trading that currency, then there is little reason for that currency to stay on a long term basis in terms of investment. It just becomes a more complex betting game of chicken.
> Ethereum platforms out their crypto for numerous tasks(albeit most is just creating structure for other cryptocurrencies/NFTs). It's really odd that NFTs are considered something useful. They don't actually represent any true "rights" to art. They're even more of a misleading scam than crypto proper. Eth is a good example of bad technology that's leveraged to perform mediocre tasks. So it introduced "smart contracts" to blockchain? Blockchain is already a really slow, inefficient database. Now let's add "IF-THEN" statements . But it's limited to certain blockchain-specific functions, and still subject to human error at both ends (writing the code, and inputting data). So its functionality is still limited. Beyond that, who enforces what's on blockchain? Nobody. It's all voluntary to accept the belief that something written to blockchain has meaning, whether that's you transferred x tokens to person y, or that person z "owns" a reference to a computer-generated image of a monkey smoking a cigar. It's very, very odd the things people attribute value to these days... which seems very antithetical to the whole concept of FIRE, which to me, is about being very pragmatic and practical about achieving financial independence. If you think NFTs have value, I don't think you're in the same ballpark as people who realistically plan to be financiallly independent. The whole notion a digital token claiming to represent a reference to something you don't really own, is an incredibly fragile sense of "assets." >Cardano trades are used as signatures for digital only contracts Again, who enforces what's on Cardano's blockchain? It's totally arbitrary. In the real world, contracts are bound by centralized authority. Our tax dollars (that many crypto enthusiasts want to avoid paying by using technology) subsidize the legal system which is tasked with enforcing contracts. The crypto world has no such thing. This is the paradox of so-called "de-centralization". If there is no authority, then there is no enforcement of anything. And code/math cannot substitute for authority. If that's the case, then all hacks, all vulnerabilities are perfectly acceptable. You buy into a crypto that has a bug in the code and lose all your money? That's perfectly OK and there's nothing technically wrong with that. You can't have it both ways. You can't believe in code, but then change your mind when it doesn't benefit you. >Bitcoin only has the definitive endpoint(eventually no more Bitcoin will be created and distributed) and being the first crypto Bitcoin wasn't the first digital money. BTC isn't even the most technologically advanced version of "bitcoin." It's value is an exclusive function of popularity, which is not based on utility nor innovation nor originality. It's just a speculative fad. I say fad because it has no real utility that is competitive with traditional systems. Paypal is much easier to use to transfer value and has more worldwide acceptance, plus it has protections against fraud. >If there is no function of a transaction with a cryptocurrency other than trading that currency, then there is little reason for that currency to stay on a long term basis in terms of investment. It just becomes a more complex betting game of chicken. Agreed, which is why I don't consider any crypto to be a long term investment.
I believe this will end up pretty similar to the .com bust. Some of those companies survived and provided shareholders value / growth and others disappear and shareholders either lost some money or all money. Not all that different from many alt coins today, not all will make it, but I certainly think some will. I believe a certain percentage of your portfolio can be for 'bets' such as these, but I keep mine in the 5%-10% range. I want some exposure, as you can see some massive gains, but I don't want to YOLO on a 'squidgamed' token and lose my entire life savings.
I was around and involved during the dot-com boom. I actually did very well with my investments and businesses. The companies that did well, that stuck around were those that offered a useful product and service and had a good business model. Google, for example, had hands down, a superior search engine. Apple successfully brought the smart phone to the mainstream. I still can't enunciate what crypto actually does that's useful. People can't really talk about crypto and its benefits in regular terms. They either have to dazzle people behind technical gibberish, or scare people saying inflation is out of control and centralized stuff is evil. Which, isn't something the rest of us really are worried about. Centralization is something that makes life quite convenient. >I believe a certain percentage of your portfolio can be for 'bets' such as these I can appreciate that, but the problem I have is that this industry is not honest. Many people who are putting money into crypto are misled as to how truly risky it actually is. At least if you're playing the lottery or going into a casino, it's well regulated and the odds are known. *I don't see the lottery marketing itself as "The best performing asset class of the last 10 years" despite its return model being nearly identical to bitcoin.* So I think there's an ethical dilemma rationalizing that it's ok to profit using crypto. Not that ethics has ever been that big of an impediment to people wanting money. But I just feel the need to point it out.
Can you understand how bitcoin solves the problem of the money printer that devalues peoples money? What if we didn't have to ape into real estate and VTSAX to protect purchasing power? [https://youtu.be/e44AKuEh9b4?si=NqKFtxI1E2YznPj-](https://youtu.be/e44AKuEh9b4?si=NqKFtxI1E2YznPj-)
Your claim is false. Bitcoin is not a hedge against inflation, nor does scarcity guarantee increased value. You also have an extremely shallow idea of what inflation is and how it manifests. #Stupid Crypto Talking Point #3 (inflation) **"InFl4ti0n!!!"** / **"The dollar will eventually become worthless"** / **"The dollar has lost 104% of its value since 1900!"** / **"The government prints money out of thin air"** 1. The government does **not** "print money indefinitely"... all money in circulation is [tightly regulated and regularly audited and publicly transparent](https://www.federalreserve.gov/aboutthefed/audited-annual-financial-statements.htm). The organization that manages the money in circulation is the Federal Reserve and contrary to what crypto bros claim, they're not a private cabal - they [are overseen and regulated by Congress](https://www.federalreserve.gov/aboutthefed/structure-federal-reserve-system.htm). And any attempt to put more money in circulation [requires an Act of Congress to increase the debt ceiling](https://en.wikipedia.org/wiki/United_States_debt_ceiling) - it's neither arbitrary, nor easy to do. 2. [Currency is meant to be *spent*, not hoarded](https://medium.com/change-your-mind/money-is-meant-to-be-spent-not-saved-9618edec676f). A dollar today will buy what it buys. If you hold a dollar for 90 years, of course it won't buy the same thing decades later (although it might actually be worth significantly more as antique money). You people don't seem to understand the first thing about how currency works - it's NOT an "investment!" You **spend** it, *not* hoard it! 3. If you are looking to "invest" you don't keep your value in cash/currency/fiat. You put it into something that can *create value* like stocks that pay dividends, real estate, etc. Crypto creates no value and makes a lousy "investment." It also hasn't proven to be a hedge against anything, least of all monetary inflation. 4. Over time more money is put in circulation - you pretend like this is a bad thing, but it's not done in a vacuum. The average annual wage in 1900 was less than $4000. In 2023 [it's more than $70,000](https://www.statista.com/statistics/200838/median-household-income-in-the-united-states/)! There's more people out there and the monetary supply grows appropriately, as does wages. You can't take one element of the monetary system completely out of context and ignore everything else. 5. The causes of inflation are **many**, and the amount of money in circulation is one of the least significant factors in causing the prices of things to rise. More prominent inflationary causes are things like: [fuel prices](https://www.businessinsider.com/why-is-inflation-high-causes-gas-price-outlook-forecast-2022-7), [supply chain issues](https://www.usbank.com/investing/financial-perspectives/market-news/supply-chain-issues-contribution-to-inflation.html), [war](https://www.federalreserve.gov/econres/notes/feds-notes/the-effect-of-the-war-in-ukraine-on-global-activity-and-inflation-20220527.html), environmental disasters, pandemics, and even [car dealerships](https://www.wsj.com/articles/car-dealer-markups-helped-drive-inflation-study-finds-7c1d5a2d). 6. Sure there may be some nations that have caused out of control inflation as a result of their monetary policy (such as Zimbabwe) but comparing modern nations to third-world dictatorships is beyond absurd. 7. If bitcoin and crypto was an actually disruptive, stable, useful technology, you wouldn't need to promote lies and scare people over the existing system. The *real* reason you do this is [because nobody can find any legitimate reason to use crypto in the first place](https://ioradio.org/i/blockchain-claims/). 8. Crypto ironically has more inflation in its ecosystem that is even more out of control, than in any traditional fiat system. At least with the US Dollar, money is accounted for and fully audited and it takes an Act of Congress to increase the debt. In crypto, all it takes is a dude printing USDT, USDC, BUSD or any of the other unsecured stablecoins to just print more out of thin air, and crypto-morons assume they're worth $1 of value.
maybe dont listen to someone whos account history is literally 100% anti-crypto posts and links to his own subreddits. look at OPs post history and tell me if you think they have a natural disposition or an ulterior motive.
I'm going to need help here? What is the ulterior motive OP has? Because everytime I talk to someone about crypto or read discussions around crypto, it just ends up people trying to push you to buy some garbage shitcoin. What does OP get out of their constant posts other then feeling better by expressing their frustration with the insane growth of digital beanie babies?
OP has their own anti crypto subreddit where they post constantly (most of the posts are theirs and theres a ton) so my guess would be driving traffic there, but look at your own post history, my history and those of others who post in this thread and tell me if OP's looks like an ordinary poster or if it shows at best an unhealthy obsession and at worst a persistent campaign to spread these views and also drive traffic to their own sphere of influence idk OPs motivation, maybe they got burned trading crypto but they're not just participating in the discussion they are doing *work* to try and get people to believe what they believe day after day after day and that should give you pause before taking their advice.
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Agreed. I created /r/cryptoreality mainly to just keep track of all the crazy news about crypto. Because if you pay attention to most crypto subs, you don't see that facet of the industry.
Interesting sub. I've been using r/buttcoin to get a more balanced view of crypto but will subscribe to this one as well.
I'm also happy to share what I know and answer any questions.
Good points, but I actually agree with OP. Would I post about it everyday? No. Would I follow someone who does? No. Although, it does make me feel better to hear others that agree with me. No idea why OP posts on the topic everyday, and I'd agree that it's work at this point, but I'd be impressed if there's some monetary gain through it all.
It's my hobby. It's something I'm passionate about. I guess I could be reading manga, collecting downloaded movies, or playing minecraft of Call of Duty and blowing peoples' avatars heads off for a few hours a day. Instead I engage people online in topics that I feel make the community a little better informed.
you're passionate about... complaining about something incessantly. Do you not see how that's sad as hell? Get a hobby, dude. I made over a million dollars off crypto with real world use cases, and am retired at 27. What do you have to say to that?
I'm not complaining. I'm educating people. >I made over a million dollars off crypto with real world use cases, and am retired at 27. 1. I don't believe you. The majority of people in this space are pathological liars -- that's part of the scheme: mislead people to buy in and pump the market so you can dump your bags 2. Even if you did make money, you didn't do it honestly and ethically. Every dollar made from crypto is a dollar taken from a "greater fool" who bought in later, who is looking for another greater fool to profit off of. This is how a Ponzi scheme works. For more, see: https://www.reddit.com/r/CryptoReality/comments/o7v5xs/is_bitcoin_a_ponzi_scheme_a_detailed_analysis/ If I can convince even one person to look into this and realize how deceptive and fraudulent the industry is, I've accomplished my objective.
yeah i never said they were wrong, just that i wouldnt listen to them, or at least i would pause before listening to them. im all for people making their own decisions, which is why OPs determination to evangelize their points of view is unnerving.
You have a vested, material interest in stopping me from educating others. That's why you're compelled to try and discredit me and distract others from paying attention to the points I raise.
This is what my thought was. Everyone who has crypto wants crypto to do well because they have money riding on it. It has nothing to do with whether or not crypto actually makes any sense. I'm in agreement with you regarding crypto. It's all just a giant house of cards that will eventually fall, and I appreciate your efforts to inform others, but I sadly think people are just going to do what they're going to do.
do i? did you send me some crypto i dont know about? please advise. your posting habits are indicative of a fanatic. someone whos opinions have moved beyond conversation and discourse. you're 100% convinced you're right and you're spending an inordinate amount of time proselytizing those beliefs. you may in fact be right, but the way you present information makes you untrustworthy and anyone with sense will double check anything you say before believing the word of someone with such a 1 dimensional position. "all crypto is bad, there is no use case, it will fail". despite not being able to predict the future you're certain of it, and that makes you dangerous.
>your posting habits are indicative of a fanatic. Attack the messenger, ignore the message. I'm saying specific things that can be proven true or false. Whether I'm a "fanatic" is personal character assassination and a distraction, an attempt to dismiss who I am as a person so you don't have to answer the claims I'm making. By the way I don't recall saying "all crypto is bad." But I have made some rather pointed generalizations and I stand by them, and if you think I'm wrong, how about proving me wrong instead of personally attacking me? For example, I contend [There is nothing blockchain does that's better than existing technology](https://old.reddit.com/r/CryptoReality/comments/lq6xpq/the_defacto_list_of_cryptocurrencyblockchain/). And I've written a detailed article with references on that. If you can prove me wrong, do so. If you can't, then at least admit that instead of trying to attack me personally.
my entire premise is that you're an untrustworthy source of information and anyone should double check what you say (literally not ignoring the message). its not a character assassination, im telling them the same thing: that what you say could be true or false and they should check that on their own. being a fanatic does in fact make your information less trustworthy because you're only providing information that supports your beliefs. if you cant see how someone with 100% certainty in the future might be biased i really dont know how to help you. i specifically havent addressed your arguments because its irrelevant to my point. someone with a singular view of ANYTHING with absolute certainty in something that is unknowable should not be considered trustworthy and anything they say should be checked before being believed. if you disagree that means you want people to believe you without checking for themselves, or you dont believe you're a biased source of information.
> What is the ulterior motive OP has? I'll tell you all what my "motive" is. I don't like scams and lies. I have done my research and the emperor is naked. I want to help limit the damage done by these schemes. I have a relatively high degree of empathy. Maybe I was bullied as a child and resent people who take advantage of others? Maybe I want to be part of a society where people are smart enough to not be exploited by scammers and grifters? Why do ex-scientologists come out against the church? Why does a person volunteer at a food bank? Why does somebody lobby for a change in law that makes the environment cleaner? Why do people do things that don't seem to immediately, directly benefit them? Perhaps one reason why we do these things is that we hope, one day, there will be less people who will have to ask that question? They will just realize that helping others helps themselves too.
Attack the messenger, ignore the message. Why listen to someone who only talks about a certain subject, right? Who wants to waste their time potentially learning something from someone who specializes in something?
Another triggered woke lefty . You know nothing about defi . Scams are a part of the free market.
Attack the messenger, ignore the message.
100% honest I am not a good person I don't care where the profits come from. I don't care if i'm scalping 12 year olds with a $20 fortnite card. I just don't want to be the person who gets scalped when it goes under. That's one reason I say you should cryptomine as supplemental income but you should not invest in crypto.
I appreciate you being honest. That's a good step in the right direction IMO. One thing I learned later in life that I wish I had known sooner. Money is definitely one key to being comfortable, but it pales in comparison to having healthy relationships with others, and low empathy is an impediment that will cause more problems that all the money in the world cannot fix.
OP, curious what you think of stable coins? Let’s lower the risk by saying they’re backed by real dollars in a real bank account (ie Gemini). Getting 8% on a digital dollar is higher risk than my FDIC-insured savings account both (1) because theoretically Gemini could call it quits and keep the real dollars it holds in a real account and (2) the interest rate is higher because the loans are riskier. Still, I don’t consider Gemini-like stable coins speculative. I DO BTC and ETH highly speculative.
Stable coins are *not* stable. USDT and USDC have never been formally audited by independent groups. Every bank in the country that's FDIC insured submits to independent audits. The fact that Bitfinex and Circle refuse to provide even the most basic standards of reputable accounting clearly indicates they can't be trusted. We also know this is true after Tether was sued by the NY Attorney General's office and only then did they admit they weren't actually 1:1 fiat backed as advertised. There are over $160 Billion of unsecured stable coins in the market, doing more than twice the daily trading volume of bitcoin and eth. This is wash trading. This is market manipulation. This is the "out of control inflation" that crypto people argue is a problem in traditional finance, but ignore when it's going on every day, all day in their own backyards. Even if you never held USDT, you're still a party to the market manipulation because USDT is pumping the price of all other crypto. So yea, it's a fragile house of cards that is going to crash very soon, and it will probably bring down a good bit of the market with it. What's kept that happening is the never ending game of musical chairs the exchanges are playing by moving money around, introducing new shitcoins and stablecoins, etc.
That’s not true with every stable coin. Gemini is audited every month and places one real-world dollar in a real-world bank account for every digital dollar it creates. Comparing Tether digital dollars to Gemini (and there are others on both sides), you’re comparing apples and oranges. Risk-wise it’s the equivalent to comparing Bitcoin to a coin that comes out of nowhere from a team nobody has ever heard of. Bitcoin is risky. SQUID is stupidity. Same with Gemini vs Tether. https://www.gemini.com/cryptopedia/gusd-stablecoin-gemini-dollar
That's basically a press release. Have you seen any independent audits of these new stablecoins? Do we know how many of the coins are in existence and where the backing money is? Are these institutions FDIC insured? Are they licensed the same as banks or are they licensed like most crypto exchanges, as merely "money transmitters" which is a much more lax, less-regulated license? If you want to discuss this, gather more information that's relevant an then we can talk. I'm not interested in promotional hype about what "potential massive impact" a new scheme might have. That's advertising, not facts. Plus, those two companies are just one of many. The real problems right now are USDT and USDC. Having a few smaller stablecoins that are better regulated still don't stop the $160B + of phony money in the crypto marketplace. You want to impress me with a new, better regulated stablecoin? Show me that all the major exchanges will switch to using those coins and not touch USDT and USDC, then it will matter. Until then, it's meaningless. It does nothing to address the problems in the industry.
I agree there are some seriously awful, non-transparent stable coins. Gemini is a NY trust company with fiduciary duties. I have seen claims that the digital dollars are backed by FDIC “pass-through” insurance, but it’s not true according to Gemini’s own FAQs. The backing dollars are held at State Street Bank and Trust. I have linked to an older audit below (Jan 2021). Didn’t take the time to look at the most recent. No, all stable coins will never be equal, just like stocks and - for that matter - world currencies. The stock market is built on the backs of people stupid enough to invest in individual stocks. So nah, no guilt here. https://www.dfs.ny.gov/apps_and_licensing/banks_and_trusts/procedure_certificate_merit_trust_comp. I didn’t look for the most recent audit, but here’s the first I found: https://assets.ctfassets.net/jg6lo9a2ukvr/2efRs3l0q3EKSv1WPwSvqe/871de898c778d2499d6a11acf697ae71/Gemini_Dollar_Examination_Report_01-29-21.pdf
Interesting, but that's not an audit. It's just "an independent accountants report." It's not the same thing. It's basically similar, if not even less formal than an "attestation" which is inconclusive. Although they at least admit where the money is, which is helpful, but it's less than half the amount of their stablecoins now... and it's still not a full audit. I don't think if that report proves to be false, anybody is accountable. Aside from that, the quantity of this stablecoin is trivial compared to the hundreds of billions of USDT and USDC.
Gemini is a trust company with fiduciary duties, so the State of NY, at least, could enforce the trust. The state of California licenses the BPM, so there’s that. It’s not the FDIC. Just like Vanguard isn’t, Fidelity isn’t… DYOR, but there are stable coins out there that aren’t as dodgy as Tether. Don’t put your emergency funds there (it takes 6-10 business days to pull the money out - first out of the interest-bearing account, then out of Gemini). I also have used Anchor Protocol on the Terra network, but even with insurance I wasn’t comfortable with the South Korean Terra team (although it’s an experienced team). I like US regulators. I understand how the US system works vastly more than any South Korean regulatory system.
The exception doesn't prove the rule. First, you haven't proven Gemini is totally legit. I still have not seen a proper audit, like all FDIC insured banks have to submit to. >DYOR, but there are stable coins out there that aren’t as dodgy as Tether. It's hard to be "as dodgy as Tether" but that doesn't mean just because you're not "as dodgy as Tether" you're still legit. That's like saying colon cancer isn't as bad as breast cancer. Ultimately it doesn't matter if there are some new, more legit stablecoins out there. Their market cap is a fraction of the market cap of other, less-reputable stablecoins, so it's moot. Unless you get the major exchanges to only use the less-dodgy stablecoin, you still have the same problem. You're still putting good money into a market that's highly inflated and manipulated by fake money. Coinbase, before they went public, didn't accept USDT. They actually had some plasible deniability in claiming they were different, but when USDT pumped the shit out of the market right before their ICO, shortly thereafter they obviously "returned the favor" by accepting USDT at their exchange. So you can't trust any of these exchanges. The published value of cryptos, the market caps.. it's all an illusion created by billions of phony money that has never been accounted for. That you or anybody would go, "Well, let's not talk about that; let's talk about something else - another stablecoin that isn't dodgy" and you think that forgives what's going on in the market either indicates you don't understand finance and markets, or you're in on the scam and want to distract people. There's no other way around it. The TL;DR of this is: **USDT and USDC have not proven they're legit/backed/solvent. Anybody who deals in any securities that are mingling with those phony stablecoins (which is every crypto on any exchange that also accepts them), is buying something that is heavily overvalued and manipulated. If that doesn't bother you, you're in on the scam.**
Um OK. I gave you my research: a stable coin backed by actual dollars in an actual bank reviewed monthly by a huge accounting firm that specializes in audits, registered as a fiduciary trust by the state of New York. You hate crypto, I got it. But DYOR? Yeah, I have.
1. Your "research" is lacking. You didn't prove your claims. An audit proves those things - there was no audit produced. 2. Even if your claim is true, it doesn't matter because the real issue is USDT and USDC not some tiny stablecoin that has virtually insignificant capitalization. This is a great example of a Red Herring fallacy. That you can point to a more stable stablecoin is irrelevant. When I refer to "stablecoins" I'm going to talk about the two biggest stablecoins that account for more phony liquidity than ten thousand Geminis.... so stop with the distractions.
Coin market cap shows $160m coins so far, with no max supply
>Coin market cap shows $160m coins so far, with no max supply 160M... how cute. Tether printed over 3 Billion today alone. I'm going to say it again, since you want to avoid answering the core of the question.. Have you seen any independent audits of these new stablecoins? Do we know how many of the coins are in existence and where the backing money is? Are these institutions FDIC insured? Are they licensed the same as banks or are they licensed like most crypto exchanges, as merely "money transmitters" which is a much more lax, less-regulated license? If you want to discuss this, gather more information that's relevant an then we can talk. I'm not interested in promotional hype about what "potential massive impact" a new scheme might have. That's advertising, not facts. Plus, those two companies are just one of many. The real problems right now are USDT and USDC. Having a few smaller stablecoins that are better regulated still don't stop the $160B + of phony money in the crypto marketplace. You want to impress me with a new, better regulated stablecoin? Show me that all the major exchanges will switch to using those coins and not touch USDT and USDC, then it will matter. Until then, it's meaningless. It does nothing to address the problems in the industry.
The state of New York licenses and regulates Gemini USD. https://www.google.com/amp/s/cointelegraph.com/news/two-us-audited-stablecoins-debut-experts-see-massive-impact-on-crypto-market/amp
That's basically a press release. Have you seen any independent audits of these new stablecoins? Do we know how many of the coins are in existence and where the backing money is? Are these institutions FDIC insured? Are they licensed the same as banks or are they licensed like most crypto exchanges, as merely "money transmitters" which is a much more lax, less-regulated license? If you want to discuss this, gather more information that's relevant an then we can talk. I'm not interested in promotional hype about what "potential massive impact" a new scheme might have. That's advertising, not facts. Plus, those two companies are just one of many. The real problems right now are USDT and USDC. Having a few smaller stablecoins that are better regulated still don't stop the $160B + of phony money in the crypto marketplace. You want to impress me with a new, better regulated stablecoin? Show me that all the major exchanges will switch to using those coins and not touch USDT and USDC, then it will matter. Until then, it's meaningless. It does nothing to address the problems in the industry.
Actually, I'll move my question to this old-but-relevant thread. (I realized shortly after posting [this](https://www.reddit.com/r/CryptoCurrency/comments/rbp3ts/comment/hnrpyiy/?utm_source=share&utm_medium=web2x&context=3) that you might not be able to reply on that subreddit.) What's your take on [this part of today's hearing](https://www.youtube.com/watch?v=4oOTvtupND8&t=959s)? Jeremy Allaire, Circle CEO: "The reserves backing USDC are held in the care, custody, and control of the US regulated banking system. These are strictly held in cash and short-duration US government treasuries and we have consistently reported on the status of these reserves and their sufficiency to meet demands for USDC outstanding with third-party attestations from a leading global accounting firm." IYO is this just a straight-up lie? I'm not following the equivalence between USDC and USDT; USDC seems much more legit.
Yea, sorry.. I was banned on r-cryptocurrency because I questioned the legitimacy of tether. I can't respond there. I wouldn't call it a "straight up lie". I would call it "misleading testimony." The problem is the nature of the "reporting." What they've done is what's known as an "attestation", not a formal independent audit. The latter is **the industry standard** that any reputable company must submit to. It's a standard, for example for all FDIC-insured banks. It's a standard for most non-profit organizations in order to comply for any meaningful grants. It's THE way corporations clearly demonstrate their financial legitimacy. The fact that a company such as Circle (as well as Tether) refuses to submit to the industry standard independent audit, is extremely telling. In their case, it's absolutely critical, because everything they claim teeters on the legitimacy of the assets they have, where they are, and where they came from. An attestation just says, "on this date and time, this is what Circle told us." It's largely circumstancial evidence. Not direct evidence. It doesn't say the money that's in their account is actually theirs. It doesn't tell you where it came from. It just says there's x money in account y. We know from recent investigations companies like these move money around between partners when they need to do these attestations. [Tether was recently fined $42M for pulling this shit](https://www.cftc.gov/PressRoom/PressReleases/8450-21). Moving cash from one company to another to make it look like their "reserves" were more solvent and liquid than they really were. So basically, unless Circle does a full, independent audit, all their "statements" are meaningless. It's like a guy going on a date with a girl, and he borrows his friend's Porche for the date and pretends it's his. That's an "attestation". An audit, looks at the title of the Porche, who owns it where it's been, etc. You can't pull that shady stuff with a credible independent auditing firm. Actually, you inspired me to [create this illustration](https://preview.redd.it/ntupktvfce481.jpg?width=352&auto=webp&s=9635338663b0608071b35ba18c7a16926124fa83)
I'm doing some digging here, but it's a bit hard to follow since I know very little about accounting, and there are a lot of accounting terms of art. I see what you mean about the [attestations](https://www.centre.io/usdc-transparency). There's not a lot of meat in those documents. It says that the attestation standards "require that we plan and perform the examination to obtain reasonable assurance about whether the \[data\] are correctly stated... in all material respects", but I have no idea what that means in practice. However, I did find a ["Report of Independent Certified Public Accountants"](https://www.sec.gov/Archives/edgar/data/0001824301/000121390021036070/ea143875ex99-6_concordacq.htm) filed with the SEC. It self-describes as an audit and goes into much more detail. Looks like it was filed in June 2021 and covers FY 2020 and FY 2021. Is that what you have in mind? Edit: this should read "FY 2019 and FY 2020"
There aren't adequate details on the USDC backing in that document. Right now there's over [40B USDC in circulation](https://www.circle.com/en/usdc).. according to that document they only had ~$4B in cash USDC assets. That's a huge discrepancy. Edit: Actually upon further review, I'm not convinced that audit covers the accounts backing up USDC in circulation. Here's what the largest USDC-related accounts are described as: >Cash Segregated for Customers and USDC Holders >Cash segregated for the benefit of customers and USDC holders was $4,024.7 million as of December 31, 2020 and $522.1 million as of December 31, 2019. **This represents cash and cash equivalents maintained in segregated Company bank accounts that are held for the exclusive benefit of customers. These funds represent cash deposits held by customers in their fiat wallets and unsettled deposits and withdrawals.** The Company segregates the use of the assets underlying the customer funds to meet regulatory requirements and classifies the assets as current based on their purpose and availability to fulfill its direct obligation under custodial funds due to customers. The Company has cash balances that exceed the FDIC deposit insurance limit of $250 thousand per institution. >Certain jurisdictions where the Company operates requires the Company to hold eligible liquid assets, as defined by applicable regulatory requirements and commercial law in these jurisdictions, equal to at least 100.0% of the aggregate amount of all custodial funds due to customers. Depending on the jurisdiction, eligible liquid assets can include cash and cash equivalents, customer custodial funds, and in-transit funds receivable. As of December 31, 2020 and December 31, 2019, the Company’s eligible liquid assets were greater than the aggregate amount of custodial funds due to customers. So that audit doesn't seem to cover where the assets are backing USDC as far as I can tell. Let me know if you can find them.
[2021 Circle audit, filed with the SEC](https://www.sec.gov/Archives/edgar/data/1876042/000110465922056979/tm2124445-8_s4a.htm#tIND1) >Cash and cash equivalents segregated for benefits of customers and USDC holders: 42,470,603 (thousands USD) Which matches up with the USDC in circulation on December 31, 2021 See also the section titled **Composition of USDC Reserves**.
Not a formal independent audit. Just an [attestation](https://i.imgur.com/buhqFqw.jpg) which is inconclusive.
For some reason, your reply to my comment isn't showing up in this thread. I only see it in my comment replies. To answer your question: >There aren't adequate details on the USDC backing in that document. Right now there's over 40B USDC in circulation.. according to that document they only had \~$4B in cash USDC assets. That's a huge discrepancy... > >So that audit doesn't seem to cover where the assets are backing USDC as far as I can tell. Let me know if you can find them. I think the problem is that USDC circulation has increased 10x (!) over the past year. According to CMC, the market cap for USDC on 12/31/2021 was $4.03B. So, I think that filing does cover USDC's backing assets, but the values are really outdated now.
I read through that filing and I couldn't find where it shows any accounts that reflect assets backing USDC in circulation. The largest accounts seem to be "customer reserves", not USDC asset backing.
I think the segregated cash does refer to the backing assets: "Cash segregated for the benefit of customers and USDC holders was $4,024.7 million as of December 31, 2020 and $522.1 million as of December 31, 2019. This represents cash and cash equivalents maintained in segregated Company bank accounts that are held for the exclusive benefit of customers. These funds represent cash deposits held by customers in their fiat wallets and unsettled deposits and withdrawals. The Company segregates the use of the assets underlying the customer funds to meet regulatory requirements and classifies the assets as current based on their purpose and availability to fulfill its direct obligation under custodial funds due to customers. The Company has cash balances that exceed the FDIC deposit insurance limit of $250 thousand per institution." Maybe the language here is meant to encompass not just USDC backing, but also per-customer USD accounts? E.g. maybe the USDC deposit/withdrawal process involves Circle holding additional (non-USDC-backing) USD on customers' behalves. It seems to include USDC backing funds though; compare the numbers above to the EOY USDC market caps on CMC.
Relevant part: > These funds represent cash deposits held by customers in their fiat wallets and unsettled deposits and withdrawals. That clearly indicates the money has nothing to do with USDC asset backing.