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Comment by soared | Hacker News Reader

I’m no crypto fan but this is just incorrect. Stablecoins exist solely to be stable, look at tether.

You are right. How are they useful?

You can send them to people and/or exchange them for stuff. Which is exactly what you'd want to do with a currency.

But why would you do that? When you can do exactly that with a traditional currency but much safer, much cheaper, much faster and much more conveniently.

Sending traditional currencies has more roadblocks, in any form, whether you're talking physical or digital traditional currency.

The CBDC idea might bring the best of both worlds.

When you put money in the bank, it's backed by 1% real assets (go fractional reserve money!)

So let's say I don't want to put my money into something that is only 1% backed (See the Greek dept crisis). I could store cash under my mattress, but that also has some major risks.

With a stablecoin like UST, you 100% own it. Governments can't confiscate it. It's 100% backed by the asset behind it (not talking about Tether here ;)). I do agree that it comes with its own set of risks, but some people might prefer that risk over the ones above.

Or maybe I'm a foreigner and want to keep some of my personal value in dollars, but don't want to do that in cash or at some local bank.

It's basically another option at your disposal. And as the market cap of those stable coins prove, lots of people prefer that.

So this stable coin is "100% backed by the asset behind it", like a dollar, which is "backed by 1% real assets (go fractional reserve money!)". What did I miss?

1 dollar is backed by 1 dollar. 1 dollar in the bank is backed by 0.01 dollar.

And 1 stable coin is backed by 1 dollar in the bank. That means one stable coin is backed by 0.01 real dollar.

UST is not backed by dollars in any way, it's backed by assets that have a corresponding value in dollars.

So no, your statement is incorrect.

How can't a government confiscate the currency hold by stable coin provider? They are the government, they can do any tyrannical move they want.

Because the stable coin provider lives in web3, and so is distributed over the whole world.

So in case of UST, as long as the Terra network is up, your coins are there.

What would it take for a government to take down the Terra network? I guess more than what it takes to take down the BitTorrent network. And last time I checked, I can still download any movie on there.

So a government being able to confiscate a wallet on a blockchain, seems very unlikely if you protect it well.

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