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Comment by wtvanhest | Hacker News Reader

Do you know what the use case for holding stable coins is? I haven't figured out why anyone we ould need them.

Yeah, for transactional use cases. We could place stable DAI in a smart contract and be sure that it's value was going to not change (except minimally) against the dollar. We also get all the benefits of block chain infrastructure (borderless, cheap for even large amounts, etc). We can program DAI in a way that isn't possible with USD.

Most cryptocurrencies are used for speculation. If you want to sell high, buy low you need something to trade against.

Many exchanges, especially those that offer any type of contracts trading, are not under normal financial regulation and to the extent they even offer fiat denominated orderbooks there is a risk premium attached to it. When withdrawals are not guaranteed by by any type of regulatory body people could just as well trade pretend-dollars, and that's basically what stablecoins are.

Be cautious out there. At least these holders got their money back.

People who'd want to spend cryptocurrency might want cryptocurrency's advantages, without its volatility.

People who want to invest/speculate in cryptocurrency will often want some proportion of their portfolio value to be as stable as USD. But, actually holding true USD at exchanges/banks could be more complicated, requiring interfacing with legacy banking systems & regulations. A stablecoin allows USD value to be handled at exchanges (and transferred) in manners almost wholly analogous to other cryptocurrencies.

Except these stable coins doesn't solve the core problem cryptocurrencies do: uncensorable transactions. Tether for example has the ability to freeze addresses. They can also freely manipulate the coin supply (a necessary feature for stable coins) which goes against the decentralized idea of cryptocurrencies.

AFAIK Basis and DAI are both trustless; not everything is as bad as Tether.

DAI has some sort of emergency provision for freezing the entire chain and returning stakes, controlled by MKR token holders, whoever they are.

It has a global settlement (which more or less liquidates all collateral). It doesn't freeze the ETH blockchain that DAI are traded on. DAI could be returned to the main contract for X amount of ETH based on the spot price of ETH when the global settlement is executed. But DAI could still be traded around independently of the global settlement. It's value might have slipped as a result, however, based on whatever ETH became worth following the settlement. The market would still determine that price, however.

Writing a contract in stable coin denomination fixes your crypto platform costs in non-crypto terms, and enables things like Ethereum contracts to transact in dollars.

This simplifies, eg, a dApp hiring staff: you hire them for stable coins, which they cash out at various certified brokers.

Anything other than speculation benefits from stable value.

In the idealistic sense a couple come to mind:

1. A base "asset" to hold with nearly instant ability to move, ideally without changing value relative to the reporting currency.

2. Moving assets around between exchanges/markets/wallets outside banking hours (9a-5p M-F).

3. Banking one-self (no intermediary ever required), the owner can determine the appropriate security procedures for their assets (granted this may well be not on target of the use-case...)

there's no reason to hold any stablecoin other than speculation (is it really really worth an equivalent fiat unit) or temporal liquidity. This whole concept of a stablecoin is fallacy unless you think it might serve some liquidity or velocity purpose.

What???? What if you want to have a product that normal people can use?

Use dollars

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