Heard about the news of Paypal creating its own stablecoin recently but after checking out this reddit post it really makes me wonder what the point behind them is. I'll be going through some of the comments and proofs behind their claims while talking a bit about why HBD in contrast is a much better alternative and some thoughts in its future usecases through a possible simple mindset as I'm not a dev or financial mathmetician. :P
The Reddit post claims that Paypal's stablecoin has the ability to freeze its tokens and burn them, the latter is usually not much of concern since you want to remove tokens from supply whenever an exchange occurrs on and off the stabletoken through its issuer. Think of Tether and the way they run things, large institutions or private companies/investors can do deals with Tether to exchange fiat for their stabletoken, this is usually done as onramps for them to get easier access to crypto coins. As far as I know it's to avoid having to deal with taxes where if you're using direct fiat to purchase or sell tokens you'd have to announce each trade rather than just declaring whenever you go in and off usdt in this instance, but there could be other reasons as well.
The freeze tokens is a bit more worrisome, especially for those who entered this space for the value of immutability and "your keys, your coins" as in this regard that's not always the case. While we know that this exists and has occurred lately for the worst case scenario cases such as illegal activities like big hacks/scams and potential other lawfully dangerous activities, the line is quite thin and who knows how it's going to progress over time.
Knowing Paypal and the reputation it had in its past with its own centralized database credit, how many people have had their accounts randomly disabled, funds frozen, not allowed to access them for long periods of time, etc, it's not a surprise that they'd want these options available for their token but it really begs the question of why even create a stable token to begin with. Are they chasing the hype, trying to stay relevant or just matching with other big payment and potential upcoming payment providers and past ones like circle's usdc?
In the Reddit post they also mention that this is something USDC and USDT has been able to do all along as well and there's a banlist of addresses visible on the blockchain with USDT having banned 918 addresses and USDC 174. Here's a screenshot of the contract mentioning the ability to freeze and burn addresses and funds.
It seems to me that the way they're entering this market is with a grain of "okay these solutions already exist" and everyone wanting a piece of that pie but at the same time with a little hint of china's social credit score. Once the masses are more used to using stablecoins rather than centralized credit the governments may get a better understanding and insight as to where these values are ending up. Basically using the blockchain for analytics and historical data to potentially find out more about the customers who end up using on and offramps. You deposit some usd on Coinbase, end up sending USDC to an ETH address you've been using the past 5 years, now its linked to you and they can scan the data of that address to question you what you did with the profits of that NFT you sold in 2020 or how you managed to get these erc-20 tokens, etc. While the sole purpose for this is probably to track those evading taxes it really paints a bad picture into the dystopian nightmare we all fear that our privacy will cease to exist.
It's going to be interesting to follow the cases in which these banlists and frozen assets are used, while close to no one likes that they can do this, pretty much everyone will beg for this options when their tokens get stolen or their keys get hacked. I've witnessed this personally on Hive as well with the often misunderstood social recovery feature we have. Whenever I tell them there's not really anything I can do since they have lost the keys as opposed to someone having stolen/copied them and changed them to access their funds and lock them out of their accounts, they think that you can recover them even if the keys are just gone and plead for me to do something about it.
While HBD isn't immune to being tracked when and if you attempt to off-ramp into fiat to be tracked by governments through exchanges, it does do one thing different and it does it well. Immutability. Hive doesn't have a history of tokens being frozen and burned, while the option exists and was used to protect its values of decentralization and said immutability through risk of governance takeover, we can rest assured that it won't be used for things that other stabletokens may already be using it against. Aside from Dan and Ned hardforking this chain very early on in its age to prevent a hacker having stolen all their Steem, there haven't been any other cases of hardforks to assist someone's stolen tokens or lost keys. While this sucks in many ways and I think many would understand the use of it, it goes against the immutability factor because you give it an inch and suddenly people start wanting a mile. This mile may be something that is a lot closer to these giant stablecoins that we think and given the decision making of the inches is fully centralized it's hard to determine and come to agreement with how it will be used in the future. That's why it's important for Hive to remain decentralized, witnesses proposing ideas that go against this being able to be unvoted from power.
Given everything going on, it seems less and less tokens and their solutions out there are truly decentralized and immutable. While close to no one outside of this space knows what HBD or even Hive is, I like that it's going to be one of the secure haven against these actions cause even at a low hbd marketcap and low trading volume/liquidity it provides insurance that if you own a Hive account and its keys and trade tokens for HBD, no one is going to be able to take them from you through the protocol. Similar to how content can't be edited by others, how the original text is still stored on chain forever and how no one can take your username/address from you just because they suddenly decide to rename their company to x, the same goes for your tokens and value.
While HBD having liquidity issues is indeed an issue for those wanting to enter the space big-time, it's not something that completely hinders those actions, you just have to be more a bit more slow with it. HBD lacks outside liquidity quite a lot, barely any exchanges offer it as a trading pair and I'm pretty sure none of them offer it against another stabletoken. The thing we can work on in the meantime is usage and utility for it, something we're seeing occurr with merchants and customers in certain parts of the world, more of this will give our stablecoin more stability and more volume which helps that stability. In general while I'm not the biggest fan of the 20% APR, I do believe that offering some APR in the future will be good to not just drive interest towards it but also make it a more favorable asset for merchants and customers to hold after they use parts of it.
Anyway, just some thoughts on the whole situation, I'm not as technically and financially inclined so take my words and thoughts behind this post with a grain of salt and feel free to correct me where I may be wrong.
Thanks for reading.