
Coinbase is launching support for the USDC stablecoin - _nvs
https://blog.coinbase.com/coinbase-and-circle-announce-the-launch-of-usd-coin-a-digital-dollar-2cd6548d237
======
Permit
Stablecoins seem like they would achieve most of the goals of the original
cryptocurrencies such as Bitcoin:

\- Decentralized transactions

\- 24/7 access

\- Low fees

\- Store of value

I suppose the only drawback here is that they're issued from a centralized
authority. That said, for practical purposes the vast majority of Bitcoin
holders didn't mine their own coins either.

Despite this, no one on Twitter[1] seemed excited. In fact they seemed upset
that Coinbase didn't announce support for their cryptocoin du jour (mostly
Ripple or Cardano). This is a recurring theme on all the subreddits I've
visited: People rarely care about the usage of their cryptocurrency, they're
only interested in its price.

A cryptocurrency that stays the same value is not very interesting to traders
and therefore most of the cryptocurrency community.

[1]
[https://twitter.com/coinbase/status/1054764504259543041](https://twitter.com/coinbase/status/1054764504259543041)

~~~
lacker
Another key drawback of USDC is that your account can be frozen by the
centralized authority:

 _USDC tokens are ERC-20 compatible and can be used with any ERC-20 compatible
digital wallet. However, a global blacklist is maintained by CENTRE for USDC,
which prevents tokens from being sent into or from blacklisted addresses.
Reasons for blacklisting could include known fraudulent or illegal activity,
or a legal order or process. Reserves associated with USDC balances held on
blacklisted addresses may be wholly and permanently unrecoverable._

[https://support.usdc.circle.com/hc/en-
us/articles/3600160603...](https://support.usdc.circle.com/hc/en-
us/articles/360016060352-Can-a-customer-send-USDC-tokens-to-any-address-Can-
addresses-be-blacklisted-)

How bad this is is yet to be seen. Anyone who has experience with PayPal
freezing their account knows that it can be very frustrating when a company
freezes your accounts for some unknown reason and then does not communicate
with you.

~~~
asynchrony
I don't see how this won't result in rebuilding the current regulated banking
system on top of an inefficient system bottlenecked by proof-of-work.

~~~
nostrademons
"Rebuilding the current regulated banking system" just with different people
in charge can be quite lucrative if you are one of the new builders who is now
in charge.

~~~
asynchrony
I can definitely see the attraction for entrepreneurs, just not the value for
anyone else.

~~~
nostrademons
It's a form of time-arbitrage.

The cost of regulation is a decrease in both convenience and innovation. By
eliminating regulation, you get a whole host of new startups that were
previously held back, some of which solve genuine problems that have no
existing solution. Consumers flock to these startups because _right now, in
this moment_ , they solve problems better and are more responsive to customers
than the existing regulated incumbents.

Many regulations solve problems that only appear at scale, so as long as the
new startups are small and voluntary, regulators take a hands-off approach and
let these startups enjoy their competitive advantage. It takes time for
regulators to catch up, so for several years, these new solutions can grow and
get new adopters. Eventually all the bad behavior that caused the regulations
in the first place appears, and there're calls for regulation, and the new
boss starts to look an awful lot like the old boss. But people don't make
their purchasing decisions based on what's going to happen in 20 years, they
make their purchasing decisions based on what they need _now_.

You see this with a lot of dot-com era startups. People knew in 1997 that
Amazon was going for monopoly and was just going to jack up prices when they
achieved it; hell, Jeff Bezos even told investors as such. But consumers
didn't care: we wanted convenience and low prices _now_ , and even if we did
without, other people would give Amazon their business, and all we'd succeed
at is disadvantaging ourselves. Similar with Facebook; most people knew they
were trading away their privacy (Zuckerburg's "dumb fucks" IM was made public
in 2010, and he said it in 2004), but goddamnit, people wanted to see what
their grandkids were up to.

~~~
rlucas
Thank you for pointing out one of the big upsides to entrepreneurial bubbles.
(Not necessarily all "speculative" bubbles.)

The simplified form is that a "gold-rush" mentality in an entrepreneurial
bubble, even though it misprices risk generally, incentivizes builders to go
build things more than they would, and since on balance building things is
good, a hyper period of new venture formation still leads to net gains even if
most are failures.

But nostrademons has a next-level mechanic here -- the idea that stage and
scale are not fractal, and hence that rebuilding an ecosystem de novo (perhaps
in a sort of sheltered petri dish) can yield big interesting beneficial
outcomes because of the plasticity of things at the smaller scale and earlier
stage.

(Still, I think it's a monumentally bad idea to acquiesce in the rebuilding of
the financial system de novo by amateurs.)

------
ThrustVectoring
"Stablecoin" in general generates a _ton_ of legal risk for the operators.

If you can make peer-to-peer transactions with it, then the coin operators are
definitely not complying with Know Your Customer and Anti-Money Laundering
laws. This will pretty reliably get the US Feds to raid your offices, seize
your website and servers, arrest the principles responsible, and prosecute
them. See also: Liberty Reserve.

On the other hand, if you _can 't_ make peer-to-peer transactions with it,
it's basically a "blockchain" in name only. There's little advantage over
traditional bank account systems. Maybe the programmability and verifiability
helps? I just don't see that sort of thing doing a lot compared to the whole
money-laundering use case, though.

~~~
lacker
_If you can make peer-to-peer transactions with it, then the coin operators
are definitely not complying with Know Your Customer and Anti-Money Laundering
laws._

You can certainly make peer-to-peer transactions with it.

But I think you are misinterpreting the KYC laws. Circle (who operates USDC)
isn't trying to be secretive about this. They are regulated as a "money
transmitter" and a "money services business" \-
[https://www.circle.com/en/usdc](https://www.circle.com/en/usdc) . IANAL but
Circle certainly seems prepared to take on any legal risks involved here.

~~~
vkou
When I cash out $50 worth of USDC, how will Circle know that I'm not
laundering drug money?

~~~
vntok
Check the blacklists.

------
apo
Stablecoins appear to be the new ICO. USDC follows on the heels of the Gemini
Dollar, and a raft of other stablecoins offered by fully-regulated bank-like
entities.

Oddly, there's nothing about regulatory compliance (AML/KYC) or fungibility in
the announcement.

Based purely on the article, one might get the idea that USDC can be traded
between individuals without any third party oversight and in a censorship-
resistant way.

It's highly unlikely this will be the case, given the potential for money
laundering.

So... USDC users get a form of digital dollar that's more difficult to use
than PayPal and the numerous alternatives because unlike those systems, the
user must secure cryptographic material. Alternatively, the user will simply
deposit USDC onto an exchange and gain absolutely nothing over PayPal and
friends.

Even worse, should the user decide to make an on-chain USDC transaction, a
permanent public record will be logged on the Ethereum block chain, which can
be used in various ways with any information lost by Circle/Coinbase due to
the inevitable data breaches (legal and illegal) to come.

I'm all for innovation in this space, but caveat emptor couldn't be more
relevant.

~~~
beaner
It can be traded directly. It's just an erc20 token.

~~~
apo
I understand its an ERC20 token. Do you understand how Coinbase and Circle
will remain within regulatory compliance (AML/KYC) regarding USDC and the
obvious potential for money laundering?

~~~
otoburb
Money laundering is a problem they must have faced earlier when allowing BTC
trades, so presumably they'll operate under the same AML/KYC regulatory
compliance umbrella required to offer their current (and growing) set of
digital currencies[1][2].

[1]
[https://support.coinbase.com/customer/en/portal/articles/263...](https://support.coinbase.com/customer/en/portal/articles/2630943-supported-
digital-currencies)

[2]
[https://www.circletrade.com/individuals/basic](https://www.circletrade.com/individuals/basic)

------
orthecreedence
Coinbase has USDC, Gemini has GUSD. Will be interesting to see how this plays
out. I'm curious if adoption becomes a function of which fly-by-night
exchanges start launching pairs.

But then again, if the fees are low enough (if my $1 truly gets me one token,
and one token gets me $0.9999 back) these tokens are going to be useful in
themselves without needing to be traded on seedy exchanges.

It would be great for taking micropayments on online services.

The thing I worry about is how these tokens are set up. If there is central
control, can the governing bodies at any time decide to deactivate my tokens?
I'd like to see the actual "contracts" behind these tokens. And even then, the
contracts can change and be updated. Obviously there are some regulatory
protections, but that won't fix people hacking these contracts.

I guess what I'm saying is, "hmm, interesting, I'll check it out in a few
years." Until then I'll likely just use it for hedging against other cryptos
while speculating if/when I decide to get back in the market.

~~~
stanleydrew
Somewhat unrelated, but the reason micropayments aren't a thing isn't that
transaction fees are too high. The reason is that consumers hate them.

[http://www.shirky.com/weblog/2009/02/why-small-payments-
wont...](http://www.shirky.com/weblog/2009/02/why-small-payments-wont-save-
publishers/)

~~~
Obi_Juan_Kenobi
The idea of a micropayment isn't monolithic. People certainly will not like to
be nickle-and-dimed to read the news, but that's fairly obvious.

The real model here is Patreon. Patreon is (well, was) about bundling payments
to make recurring micropayments practical. Their execution has issues (it's
also highly successful) but the fundamental idea of recurring micropayments is
totally sound. Audiences are receptive to it, and creators can legitimately
support their work with this kind of aggregate payment.

------
jessepollak
Hi all — head of engineering for the consumer product at Coinbase here (iOS,
Android, coinbase.com).

Happy to answer any questions that people have — also, just wanted to make a
plug that we're hiring. If you're interested in building an open financial
system for the world, shoot me a note at jpollak@coinbase.com. Especially
interested in iOS & Android engineers!

~~~
jatsign
Have you published the USDC contract to the network?

~~~
anders94
Anders Brownworth from Circle here - I just wanted to point out that
[https://etherscan.io/address/0xa0b86991c6218b36c1d19d4a2e9eb...](https://etherscan.io/address/0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48#code)
is the proxy contract. (an address that won't change but who's source code
doesn't contain the "meat" of the logic) That contract simply proxies calls to
the current main FiatToken contract deployed at
[https://etherscan.io/address/0x0882477e7895bdc5cea7cb1552ed9...](https://etherscan.io/address/0x0882477e7895bdc5cea7cb1552ed914ab157fe56#code)
but if you want to see the official repository for the project, it is
available from CENTRE on GitHub at [https://github.com/centrehq/centre-
tokens](https://github.com/centrehq/centre-tokens)

------
larrysalibra
Something that's missing from this article: Since USDC is an ERC20 token based
on Ethereum, you'll still need to hold ETH so that you can pay for gas to move
the USDC stablecoin token around.

A fiat-world analogy to this would be to imagine if spending Euros required
you to hold US Dollars to pay the transaction fees.

~~~
mavdi
Most coins are ERC20 coins. These coins might dance around all day, but the DJ
is Ethereum. That's what you should be really holding.

------
hendzen
Blockchain-based stablecoins seem like a really convoluted and environmentally
wasteful way to implement centralized, cryptographically secure USD based
account transfers.

Why not just use Chaumian ecash [0] - which is perfectly suitable for this
purpose and doesn't require mining?

[0] -
[http://sceweb.sce.uhcl.edu/yang/teaching/csci5234WebSecurity...](http://sceweb.sce.uhcl.edu/yang/teaching/csci5234WebSecurityFall2011/Chaum-
blind-signatures.PDF)

~~~
otoburb
>> _Why not just use Chaumian ecash [...]_

David Chaum probably asked exactly the same question, and starting working on
his own own blockchain and cryptocurrency[1] in 2015[2]. I'm a bit sad he
didn't call it eCash 2.0.

[1] [https://www.prnewswire.com/news-releases/announcing-david-
ch...](https://www.prnewswire.com/news-releases/announcing-david-chaums-
elixxir-first-blockchain-capable-of-meeting-the-needs-of-consumer-scale-
messaging-and-payments-300715769.html)

[2] [https://www.prnewswire.com/news-releases/global-investors-
ba...](https://www.prnewswire.com/news-releases/global-investors-back-elixxir-
a-next-generation-blockchain-platform-focused-on-mainstream-
adoption-300735829.html)

------
Animats
OK. So how does the backing of this "stablecoin" work?

Here's the website: [https://www.centre.io/usdc](https://www.centre.io/usdc)

Here's the whitepaper: [https://www.centre.io/pdfs/centre-
whitepaper.pdf](https://www.centre.io/pdfs/centre-whitepaper.pdf)

There's very little about who actually has custody of the paid-in money and
what guarantees it gets paid out if "stablecoin" outflow exceeds inflow. The
"smart contract" machinery doesn't really do much about that part.

Tether has been vague about that, too. Tether has been trading at a discount
to the dollar, lately about 3-5%.[1]

The usual failure mode is that whoever has custody of the money starts
investing it. They don't have to pay the profits to the coin holders. Then
they start making risky investments. Then they lose money. Then they start
faking it. In the real brokerage world, they go to jail for speculating with
customer funds.

[1]
[https://cryptocoincharts.info/pair/usdt/usd/kraken/1-month](https://cryptocoincharts.info/pair/usdt/usd/kraken/1-month)

------
max76
Trading is all about trust.

This represents an odd level of trust. The user trusts Circle and Coinbase
enough to purchase USDC at facevalue. The user doesn't trust Circle or
Coinbase enough to keep private transaction histories.

I understand the position of fully trusting the third party (Visa, Paypal,
Stripe) when combined with legal protections. I understand the position of
fully distrusting third parties (bitcoin, etc). I do not understand why
someone would prefer this mixed level of trust.

------
mehmeta
The main problem with fiat backed stablecoins is that in addition to smart
contract/theoretical security, you now have to also trust the procedural
security of the entity issuing the asset. A collateralized stablecoin like
Maker/Dai doesn't have that additional attack vector.

For example, if the keys issuing the USDC has ever been compromised, new
assets can be issued instantly by an attacker, compromising fungibility and
causing other problems. Whereas if Maker/Dai smart contract proves secure over
time, there's no centralized issuing entity/keys to compromise. Afaik the only
centralized privilege controlled by MakerDAO is the global settlement, which
merely refunds everyone their ether.

~~~
chemmail
The problem with stablecoins, there is no such thing as a stable coin.

~~~
QML
Whats the difference between a stablecoin and an IOU?

~~~
mehmeta
Both fiat backed assets as well as collateralized assets pegged to fiat money
are called stablecoins, because they are meant to represent units of fiat
money, and therefore "stable" relative to fiat. Fiat backed stablecoins fit
the definition of an IOU better, since they are cryptographic promises to pay
the bearer by centralized issuing entities. Whereas collateralized stablecoins
are not IOUs, they are effectively loans on other cryptoassets you deposit in
a smart contract (ether, in Maker/Dai's case).

------
anders94
Hi, I'm Anders Brownworth, Chief Evangelist at Circle. I'm happy to answer any
questions on USD Coin, CENTRE or Circle.

We're also hiring! See [https://circle.careers/](https://circle.careers/)

~~~
ur-whale
What has the SEC said about this endeavor?

Who are your custodian banks (how many)?

Who are your auditors?

Will you be holding exactly one USD for one token?

Will the backing be just USD sitting in a custodian account or do you plan to
invest them?

How are you going to deal with the fact that your custodians will likely be
doing fractional reserve themselves?

How will you guarantee fungibility of the token?

~~~
anders94
Circle works with a wide variety of regulatory agencies around the world. I'm
not aware of anything the SEC has said publicly about USDC.

We work with a number of banking partners around the world but generally don't
publicize this information.

Circle will begin publishing its USDC-related reports on centre.io after
public launch. We have engaged Grant Thornton LLP to apply on a monthly basis
certain agreed-upon procedures to assist management regarding the accuracy of
USD reserve balances for the USD stablecoin tokens issued as set forth by the
Company.

We will hold exactly one USD for one token. In the future, we may also invest
these fiat funds in highly-liquid, AAA-rated fixed income securities.

The coins minted by both Circle and Coinbase are mutually fungible. You could
acquire USDC from one and redeem it at the other. Support for multiple issuers
is an important differentiator for USDC.

More information on this is available at
[https://support.usdc.circle.com/hc/en-
us/articles/3600152783...](https://support.usdc.circle.com/hc/en-
us/articles/360015278312-How-does-a-customer-know-that-there-are-reserves-to-
match-their-USDC-holdings-)

------
endijs
I understand why stablecoin's are useful to the end user. I also understand
how Bitfinex is cashing in on Tether. However how is Coinbase making money
with USDC? They clearly will have considerable expenses (keeping reserve,
legal team, development etc. etc.). But if I give them 1USD and get back
1USDC, which later can be exchanged back to 1 USD, where are they making
money?

~~~
benjaminjackman
>But if I give them 1USD and get back 1USDC, which later can be exchanged back
to 1 USD, where are they making money?

Historically that's basically how banks have made money. Issuing bank notes
while earning interest on the capital they hold. Typically they juice the rate
via fractional reserve lending, ie they lend out more money than they have.
However if they aren't able to do that, they still get to keep the interest
from the deposits (say by buying Treasuries).

My guess is that the stable coins will continue to be more and more common,
but then cryptocurrencies will rediscover fractional reserve lending, and new
ideas like pegging a coin to the S & P. The pegger will charge a small service
fee, the holders will be able to rapidly move money they spend, almost
instantly between S&P (or other basket) pegged coins and stable coins.

There will be enough competition over being the holder of stable coins and
enough competition in that system they I would expect them to offer rebates on
transactions, and not have to charge merchant fees. And since they will be
centrally cleared and not have to deal with mining and so on, the transactions
ought to clear instantaneously.

~~~
JumpCrisscross
> _like pegging a coin to the S & P_

So we invented a less efficient ETF which has the added bonus of keeping
regulators and securities lawyers employed until the post-quantum world.

------
Fej
It is obscenely disingenuous, almost fraud, to put "USD" in the name of the
coin. That's not what it is. The ability to convert to/from the coin is
entirely based on the good graces of the issuer, and any regulators in the
relevant jurisdiction(s). People see "USD" and think it's a dollar. Stablecoin
authors know this.

Unlike more seedy exchanges, Coinbase is based in a state with useful
regulators (in this case, the US). Like others have said here, expect them to
stomp the shit out of this.

Unrelated: has anyone audited the contract?

~~~
umanwizard
The "dollars" in my bank account are not dollars either; they are something
like a WellsFargoCoin.

(Granted, there's a huge difference, since WellsFargoCoin is backed by the
FDIC... (Edit: maybe there is not so much of a difference; see the reply by
omarchowdhury. I really don't know.))

~~~
omarchowdhury
I would assume Circle (backed by Goldman Sachs) is keeping the reserve dollars
in segregated, FDIC insured bank accounts. Would be out of character and
expected policy for a U.S. operation to not to.

------
seibelj
Probably the first piece of the crypto ecosystem where being a trusted,
regulated entity in a country with a real court system is an asset rather than
a liability.

------
jeletonskelly
How are USD backed cryptocurrencies not considered illegal USD surrogates? If
they aren't yet, maybe they will be once there's a lawsuit.

~~~
crooked-v
It looks like a repeat of the Liberty Dollar to me, and that whole affair
ended with charges of money laundering, mail fraud, wire fraud,
counterfeiting, and conspiracy.
[https://en.wikipedia.org/wiki/Liberty_dollar_(private_curren...](https://en.wikipedia.org/wiki/Liberty_dollar_\(private_currency\))

~~~
Gaelan
Liberty Dollar was backed by gold. USDC is backed by USD.

~~~
paulmd
The problem is not what the transfers are denominated in, you could have
LamboCoin if you wanted. It's acting as an unlicensed money transmitter _at
all_ that will get you.

Denominating in gold or lambos or USD doesn't get you around KYC/AML laws.
Decentralized ERC20 tokens designed to transmit money are _inherently_
illegal, and setting one up will get you a visit from the SEC if you can be
traced back to it in any way. There is no end-run around this, this behavior
is literally the exact thing KYC/AML laws are designed to prevent.

(This coin gets around it because it is not decentralized - only the company
can mine blocks on this chain, and they can block transactions at will and
validate IDs/etc when transacting back to USD. This allows them to enforce
KYC/AML. They are aiming to be a _licensed_ money transmitter.)

------
fiatjaf
Seriously, what is the point? Even if this is a perfectly honest and
functioning system, if you're using a currency that is pretty much like the
dollar, regulated as the dollar, inflated as the dollar, why not just use the
dollar?

~~~
lacker
Since it's an Ethereum token, you can write smart contracts that use dollars
instead of smart contracts that use ETH.

~~~
rlucas
Buuuutttt, since it's _not dollars_ you have to trust that a market maker
counterparty will stand behind the peg when you do want to liquidate.

------
scabarott
I think stablecoins is where the cryptocurrency experiment is headed for the
near & forseeable future. It's interesting to watch the experiment slowly give
way to the reality of operating in the world at large. At least we still get
some form of digital money. On another note, I think it's really concerning
how much of a monopoly Coinbase is becoming in this space. They're probably
the only corporate entity making any real (no-scam) money (in the US) and
everyday they seem to be morphing into some kind of Goldman
Sachs/Google/Microsoft hybrid of crypto-money.

------
jf-
I have to wonder what these coins actually offer the consumer. If they’re to
be used as a real world currency for transactions, they would need to have
some utility over credit/debit cards. I don’t see what that utility is. I can
already make instantaneous purchases via contactless, and while there is a fee
for international purchases, it’s not large enough, nor do I encounter it
frequently enough, for me to look for an alternative. Why as an ordinary
consumer would I bother with these?

~~~
jatsign
An ordinary consumer wouldn't. For me, likely use cases are:

\- Transmitting money overseas. This should be way cheaper. \- Vendors who are
tired of paying 2.5% to credit card companies giving a discount to using
crypto.

~~~
jf-
That seems more like an argument for a cheap foreign exchange service, of
which I believe there are several now.

~~~
celticninja
But they are no where near as easy to use as cryptocurrency. Back in 2010/2011
I used bitcoin to buy stuff from China, I was paying something ridiculous to
do the same thing via traditional banks in fees and poor exchange rates. Even
now these foreign exchange services make it better but only for larger
transactions. Small/medium transactions still pay a ridiculous rate/fee
compared to cryptocurrency. Further exacerbated if the recipient has
difficulty obtaining banking facilities.

------
buildbuildbuild
Excited to see a reputable company like Coinbase launch this. Hopefully with
their reputation we can avoid another Tether situation.

The US government should launch their own stablecoin. A digital US dollar is a
national need that shouldn’t be managed by a corporation in my opinion.

~~~
billions
The government's "stable coin" lost 96% of its value since 1913. Time to try
something different?
[https://comparegoldandsilverprices.com/news/economics-101/do...](https://comparegoldandsilverprices.com/news/economics-101/dollar-
devaluation-since-1913/)

~~~
wcarron
What a strawman. Inflation BAAAAAD, right guys?

C'mon. We all know _why_ the Fed targets a relatively consistent rate of
inflation. It's because deflation suppresses consumer spending. Not what you
want in a consumer economy.

~~~
cheeseomlit
What if I want to save? Certainly seems kinda bad when my savings keeps losing
value

~~~
askafriend
Why not save shares of the S&P 500 index? You just sell some when you want to
buy something like a car.

~~~
arcticbull
This right here, literally how it’s supposed to work. “Money becomes worth
less over time, what should I do?” “Invest in productive assets” “OHHHHHHHHH”

There, we just saved you from having to go to an Econ class :P

~~~
celticninja
So if I have a $2000 how much of that do lose in fees when I buy shares? Sure
it makes sense if I am saving $1000 or more a month but it doesn't work when
I'm saving $50 to $100 a month for my kids college education, fees eat that up
the same way that inflation does, but both make hardly any difference to the
person saving $1000 or more a month.

~~~
arcticbull
Robinhood charges $0 in fees, so nothing. The trend in ETFs is reducing fees,
there’s now zero fee ETFs too. Even if you use a discount brokerage that
charges 3-4$ per trade the break even point is quite low, so store it as cash
until you’re happy with the fee ratio.

How much do you lose in fees when you buy crypto? 1-2%? Plus insane
volatility. If you’re low income that volatility is crippling.

------
oropolo
"Digital dollars?" We already have that -- it's called the US Dollar. Only 10%
of the USD money supply is in physical paper or coin form. I receive my wages
electronically and pay my mortgage, car payment, insurance, student loan, and
buy groceries and entertainment without ever touching printed/minted money.
And I suspect I'm in the majority on this point.

~~~
DINKDINK
Digital dollar != a programmable digital dollar. It's like bitcoin, but will
all the downsides of the dollar (endlessly inflating) + all the fragility and
throughput constraints and centralization risks of ethereum.

------
antiffan
I’m trying to think of use-cases for trusted stable-coins. The obvious one is
just another way to sell products — this has failed for Bitcoin due to
volatility risk.

One scenario I can think of is a decentralized e-reader and e-book
marketplace:

\- you have an e-reader app that is capable of decrypting books stored
somewhere, as long as the content was encrypted with your public key

\- authors publish their books to contracts that accept payments via an ERC20
stable-coin

\- the contract responds by encrypting a copy of the book with your public key
and placing it at a location your e-reader can retrieve it

Are there inherent advantages to a decentralized book store vs. Amazon though?
Not sure…

------
alcio
It's funny that the USDC website doesn't list the main use of stablecoins
(especially Tether) these days: arbitrage.

When moving fiat between two exchanges can take days and flag your accounts
for suspicious activity, moving the same value using Tether is much much
faster (~30 mins to 1 hour).

If one observes how does USDT flows, you'll find that it flows between the 3
or 4 major exchanges that use it, with almost no use elsewhere: no major
wallets, no merchant acceptance, etc..

------
ur-whale
Long list of problems with stablecoins, but a very big one is the backing
itself.

To name a few of the problems this will mechanically bring about:

1) counter-party risk: that money will need to be stored at some institution.
However small, custody carries a risk, which means the peg will drift.

2)Even assuming the audit mechanism is bulletproof (unlikely) and the
custodians risk is spread on a 1000 different institutions ... what are you
going to do with that huge stash of backing USD sitting idle in your
coinbase/circle bank accounts? How long do you think it's going to take for
someone to realize that the money can be "put to work"? Or that actually
holding the full amount is a very unnecesary thing to do. Or that banks hate
carrying huge idle USD deposits and will likely try to charge you for it?

There goes the peg.

Unless of course, like Tether did get away with for quite a long time, you're
smart enough to let the world behave you actually have the USD backing the
coin.

------
Paladiamors
I've taken a look at the many threads happening here and a large number of
people discussing the "worthlessness" of the having a stable coin because of
the lack of volatility vs the USD.

I'm actually quite interested in the outcome of this, especially because of
transaction fees for credit card payments are so high. For some places in
Asia, Japan in particular has credit card transaction fees of in the 3.6%
range and going up to 4.5% for international cards.

For businesses selling services in the $2500 range, just at 3.6% of this
transaction becomes $90 in fees just for a single transaction. Which, I think,
is quite high just for moving a digital asset around.

While the prospects of "trading" this asset might not be as interesting, the
potential for far lower transaction fees for people running a business seems
very attractive to me.

------
esotericn
"Stablecoins" are neither "stable" or "coins".

Blockchain is a Semantic Wasteland:
[https://news.ycombinator.com/item?id=18267585](https://news.ycombinator.com/item?id=18267585)

There are a few cryptocurrencies that are actually interesting. This is yet
another nonsense money grab.

~~~
DSingularity
In this instance I disagree. This is a smart contract which will create USDC
for each USD that Coinbase reserves. In other words, each USDC has a single
USD backing it. To back the guarantee they are slowing audits of their
reserves. This one is pretty straightforward.

------
simonebrunozzi
I still don't understand what's the "underlying technology". They call it a
Blockchain, is it a permissioned Blockchain?

------
lucio
Then next great "innovation" is to speed-up transactions for USDC by using a
centralized server. /s

------
ur-whale
IMO, this is just yet another crypto exchange trying to solve their day to day
liquidity headaches, with some sugar sprinkled on (programmable USD).

In doing so, I think they gravely underestimate the kind of meat-grinder
they're putting their hand in (as in: the kind of liability they're taking
on).

------
jatsign
Have they published the contract to the blockchain yet? I'm curious how much
control over it they will have. I would suspect that only they can issue it,
and that they can destroy any USDC they want at any time.

------
Vector919
Anyone have any idea why this can't be used in New York?

~~~
bjoveski
NY has special license requirements regarding crypto currencies
[https://en.wikipedia.org/wiki/BitLicense](https://en.wikipedia.org/wiki/BitLicense)

~~~
skykooler
But according to that page, Coinbase already has a BitLicense?

------
azinman2
But if it’s pegged to the dollar, how do I speculate on it?!

~~~
empath75
It makes it more useful for money laundering probably.

------
sgondala2
How can stable coin ever maintain the price? People can still speculate and
sell it for more than a $, and buyers can buy it for more than a $.

~~~
loeg
Traders, including HFT, are incentivized by the underlying value to keep the
bid/ask spread very tight.

~~~
sgondala2
Isn't this the same for any coin?

Is making a stable coin as simple as naming it a 'stable' coin ?

~~~
loeg
You could ask the same question about any security. Yes, traders in general
are incentivized to bid/ask near the actual value of the underlying security.

The difference between securities in the abstract and a trustworthy, 100%
reserve stablecoin is that the value of the latter is both known ($1) and
stable (at least in USD terms).

Yeah, stablecoins really are as simple as naming it a stable coin and pledging
100% real currency backing, so long as you can convince traders you are
trustworthy. E.g., I have some confidence Coinbase is trustworthy; I have zero
confidence Bitfinex is trustworthy.

------
nickthemagicman
Is there like a large bank account somewhere that will hold al the 'dollars'
backing the billions of USDC?

How is this implemented?

------
NoblePublius
Can someone please explain the functional superiority of this over, say, a
Venmo balance?

~~~
devmeplease
It uses blockchain technology to handle transferring funds as apposed to
something like Visa.

~~~
NoblePublius
Visa processes transactions much faster, is accepted universally, has
AML/fraud/chargeback insurance, and costs about 2.4% of transaction volume.
This has none of those and transaction costs are TBD. I’m not trying to be a
sceptic but I’m not yet convinced. “It’s decentralized” is not an argument
unto itself and certainly not an argument of functional superiority. If
anything it’s slower, harder to use, and more risky. I don’t care if my
payment system is on Visa or AWS or a blockchain. I care that it’s fast and
secure. I care that when a merchant defrauds me I get my money back.

------
shittyadmin
Well, it'll be interesting to see if Tether falls apart soon.

------
vesak
My virus/malware checker marks this blog as harmful.

------
viach
How is that different from PayPal?

