Comment by janandonly | Hacker News Reader

Comment by janandonly | Hacker News Reader

There are a few issues at play here:

1. A lot of newly 'minted' Tether's are being used to buy Bitcoin (so prop it up, the Bitcoin price rises).

2. Possibly as a next step, these now more valuable bitcoins are than sold for real money, and the owners of bitfinex/tether pocket this real earned money as profit.

3. It should be noted that although the total amount of tether is still rising, the total amount of all "stable coins" is rising a lot faster, so basically, outpacing the growth of tether: the market seems to be on to them, and puts more trust in other stable coins. Personally, I like Maker's DAO decentralised SAI stable coin a lot. But preferences vary.

4. Why is there any demand at all for any stable coin? Can't a person just send/receive real dollars/euros? Answer: No .

There are a lot of unbanked people in the world, more than we in our western minds would dare to guess, I think.

Look at El Salvador: in 6 weeks since officially adopting Bitcoin as a currency (next to the US dollar, not replacing it mind you) the number of people that now have "wallet" software running on their phone is already lager then the number of people who over the past 20 years were able to open a bank account.

> Look at El Salvador: in 6 weeks since officially adopting Bitcoin as a currency (next to the US dollar, not replacing it mind you) the number of people that now have "wallet" software running on their phone is already lager then the number of people who over the past 20 years were able to open a bank account.

A few things.

First off, a "wallet" is really a bank account, albeit one at a shadow bank (i.e., unregulated bank). In the case of the Chivo wallet, I think I read somewhere that it's actually storing the USD not as USD but as Tethers. I don't have independent verification of that off-hand, though.

Secondly, the numbers of users are being quoted by Bukele, without independent verification. I have some skepticism of the veracity. Although I will note that the Google Play Store indicates "1,000,000+" downloads. Opening a Chivo wallet came with a $30 giveaway, which gives a motivation to open one up just to claim a pretty sizeable prize--and also a motivation for scammers to do it for you, hoping you won't notice.

Thirdly, there's evidence that it's being little used. More recently, they "negotiated" with the largest gas stations to give a 20¢/gal discount--suggesting that use without promotional offerings is poor. And 93% of businesses report not having anyone attempt to use it.

Overall, this suggests that the adoption of Bitcoin hasn't been a wildly positive success.

Exactly. When Visa and Mastercard started millions started using it and almost 93% of businesses started accepting cards in the first months.

Nobody uses Bitcoin, only 1 small country

I get this and think this is most likely scenario as well but at the same time this is equivalent to just getting your app started on the box and loading data or something correctly. It’s a step and you’re happy. These bitcoin guys just got their app to start up with limited functionality. They are happy.

I’m doubtful that credit cards were as quickly successful as you imply. It takes time for consumer behavior to change. I couldn’t find a good link, but I vaguely remember a story about how BankAmerica had trouble at first after the Fresno drop?

The people claiming instant success in El Salvador are getting fooled by misleading numbers, but it’s at least plausible that this heavy promotion will eventually pay off there.

Regarding point 4, it has nothing to do with unbanked people. The demand for stable coins comes from exchanges that don't want to deal wih US financial regulations.

Exactly. If I want to borrow your comic books and lend them out to my friends for a fee, I can pay you a cut on the money I make lending them to my friends. I can't do the same thing with money because then I am a financial institution. So instead I use stable coin crypto because that isn't money.

> There are a lot of unbanked people in the world, more than we in our western minds would dare to guess, I think.

I'll bet you haven't travelled in the developing world either.

I have.

I met tons of unbanked people, nearly all because they don't have any money. And the ones that do aren't going to invest it in "some app on their phone".

> the number of people that now have "wallet" software running on their phone

And what is the median balance on those wallets?

Having the software is nice, but can they actually use it to do any banking?

> SAI stable coin a lot.

I think it's DAI now.

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