I'm constantly baffled why the crypto community isn't laughing their socks off at the existence of fiatcoins (aka stablecoins, aka The Digital-Zimbabwe, aka CentralBankCoin). Instead, crypto-pundits and investors are all too eager to mention them in all their incarnations while extolling their supposed virtues.
File Photo of Tether's Fiat Vault... or is this TrueUSD's... BitUSD... ? I forget.
I've heard all the arguments and none of them make any sense. I'm only inclined to reply to the most repeated and least sensical one.
Argument: The crypto market is too volatile.
So you think it's a good idea to peg a crypto-fiatcoin to a national fiatcoin in order to avoid instability... ?
Let me clarify your argument using this simple math:
If
fiat is going to zero
And,
crypto-fiat is pegged to fiat
Then,
crypto-fiat is going to zero
To which the pundits reply:
This is a good idea.
I know some of you will look at the above chart and say, "between 1991 and 2017 the trend line is relatively stable!" Cool. You've noticed the purchasing power is declining at a stable rate. Is the stable downward trend of an almost valueless currency a reason to peg it to a cryptocurrency?
Side note: The value of USD fiat goes down (roughly) 2-3% a year and that rate will only increase over time. There's nothing stopping it.
Look, I get it. The supporters say the idea is to hedge losses in crypto trading by switching to a stablecoin. But that's still not a good reason to use it. As inflation continues to rise, the value of the dollar can only go closer to zero. Do you plan on switching to another fiatcoin when it inevitably happens to the USD? Isn't that sort of like reaching for the nearest cobweb to escape quick sand?
We're driving nails into our feet and calling them shoes.
I'm not really sure why we're doing this. The Bitcoin fundamentals didn't change. We have solid alternatives like Monero. Central banks are beginning to feel the heat. Everything is in technically in our favor.
There's no need to use national fiat in the crypto space for any reason that isn't to permanently buy in. It's our financial world now. We can treat national fiat as the obsolete, historical lesson that it is!
If you're interested in further reading about why USD doesn't matter in crypto read this great article over at CCN
