[user142]

This article seems to be built on a few misconceptions.

It starts off with the claim that stablecoins are the modern-day 'digital gold standard' which they really aren't. Stablecoins are just tokens on a blockchain the vast majority of which are backed by US dollar cash and cash equivalents. There is nothing gold-like about these stablecoins. Maybe the article refers to the rumors that Tether isn't fully backed but this isn't clear from the article. As the article also mentions, the GENIUS Act requires compliant stablecoins to be fully backed (by US dollars) so the GENIUS Act would actually be the reverse of what Nixon did in 1971 by leaving the gold standard. The problem with the gold standard was that gold is a scarce physical asset that cannot just be created. There is no scarce asset involved in stablecoins so the comparison between stablecoins and the gold standard doesn't make much sense to me.

Then there is the claim that there are $13.2 trillion 'shadow dollars' circulating outside the United States via stablecoins which makes no sense given that the biggest stablecoin (USDT) only has a market cap of $143 billion (actually $158 now) which is also mentioned in the article.

The article then goes on to compare the GENIUS Act to the Nixon shock by 'turning off the stablecoin faucet'. It then correctly mentions that major stablecoin issuers already have freeze and burn capabilities so it becomes unclear how the GENIUS Act would 'turn off the stablecoin faucet'. From all I've read and heard so far people expect the passing of the GENIUS Act to lead to increasing stablecoin liquidity.

[bsenftner]

The entire crypto financial everything is entirely built on misconceptions, that is their sole asset.

[apples_oranges]

You know I agree. And it made me win far less from crypto than I would have if I weren’t a skeptic from the start. But recently something changed my mind:

Friends from an occupied territory visited on their travels and they said they can only pay with cash since their cards do not work in the let’s say „free world“ (my wording not theirs). And they said how difficult it is to live without a CC. You can’t get a hotel room in many places.

This made me reconsider my stance on using cash and I started doing it again just so it survives.

But let’s say cash goes away, in that case we _need_ an alternative that cannot be censored, blocked or otherwise cancelled.

And this could be Bitcoin (or let’s say litecoin - my favorite)!

But yes so many scams and as you say misconceptions everywhere. People don’t understand money and they think whatever promoters tell them to think.

[Mistletoe]

>The problem with the gold standard was that gold is a scarce physical asset that cannot just be created.

I don’t find that a problem at all, it was what made the money work and be worth something.

https://wtfhappenedin1971.com/

[haebom]

This article was written because I suddenly remembered a story I wrote in 2018 to someone working in Singapore. As I also mentioned in the writing, it has a strong conspiratorial nature. However, I personally have such doubts. Currency should fundamentally be exchangeable, but currently Tether and Circle exchange these for dollars and purchase relatively safe short-term government bonds from the US or China, making this arrangement seem natural. However, if they were to face a situation like a bank run or become unable to pay out $1, I think the analogy of a “water faucet” wouldn’t necessarily be incorrect.

[user142]

Stablecoins are quite different from banks. Under the system of fractional-reserve banking, banks by definition only have reserves for a fraction of their user's balances. Stablecoins are meant to be fully backed and the issuers claim to be fully backed. In theory it is possible that the issuers are lying but in practice this seems unlikely. Running a stablecoin business seems to be a relatively inexpensive operation compared to the amount of money you can make by investing your reserves into short term treasuries in the current interest rate environment. Even if Tether wasn't fully backed in 2018 they should have made billions in profits since off interest rates and recovered their losses.

I still don't understand your argument how the GENIUS Act would turn off the 'faucet'. Legalizing and legitimizing stablecoins would presumably lead to more stablecoin issuance instead of a bank run.