The IOU analogy is not mine, and I get the concern, it’s a big simplification that could also apply to regular money. I hold USD or CAD and expect it to be accepted in exchange for something else.
I could have made that point in the article. Might adjust later
My perspective is that the IOU is closer to the truth than a digital dollar. Central Bank Digital Currencies (CBDCs) would be the only true form of digital dollars but those are likely to be outlawed in the US with the Surveillance State Act. There is no explicit guarantee of getting back your money when you want to exchange it from stablecoin to dollars. If the company doesn’t have the money there is a run and the peg breaks, or a bailout, or they go bankrupt.
Fantastic point. Given the audience of an article like this seems to be more for beginners I think getting too technical can get them in too over their head
Lyn Alden, in her book Broken Money and elsewhere, has argued that Bitcoin specifically has a use case of avoiding local currency depreciation safe from government interference. This matters a lot in countries with unstable currencies -- Egypt, Nigeria, others. But Westerners from developed countries say things like those you quoted, reflecting to my eyes a narrowness of thinking and vision.
Thank you Paul! You are absolutely spot on. Most in the western world equates crypto as it being useless because they never had to live through triple or quadruple digit annual inflation and capital controls.
Good overview. Thanks for writing !
Not quite sure I like the IOU analogy though. Did you come up with it or did you see it referenced somewhere?
I like to think that a stablercoin is simply a more efficient digital dollar. An IOU makes it feel unstable / uncertain
The IOU analogy is not mine, and I get the concern, it’s a big simplification that could also apply to regular money. I hold USD or CAD and expect it to be accepted in exchange for something else.
I could have made that point in the article. Might adjust later
I would try. You’re very close with this article. If you want to make changes DM them to me. Very well versed in this world.
Yeah I’ll add a few things later this today/this week. I may very well take you up on that!
My perspective is that the IOU is closer to the truth than a digital dollar. Central Bank Digital Currencies (CBDCs) would be the only true form of digital dollars but those are likely to be outlawed in the US with the Surveillance State Act. There is no explicit guarantee of getting back your money when you want to exchange it from stablecoin to dollars. If the company doesn’t have the money there is a run and the peg breaks, or a bailout, or they go bankrupt.
Fantastic point. Given the audience of an article like this seems to be more for beginners I think getting too technical can get them in too over their head
Thanks, Ben. Nice, informative article.
Lyn Alden, in her book Broken Money and elsewhere, has argued that Bitcoin specifically has a use case of avoiding local currency depreciation safe from government interference. This matters a lot in countries with unstable currencies -- Egypt, Nigeria, others. But Westerners from developed countries say things like those you quoted, reflecting to my eyes a narrowness of thinking and vision.
Thank you Paul! You are absolutely spot on. Most in the western world equates crypto as it being useless because they never had to live through triple or quadruple digit annual inflation and capital controls.