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Comment by hasperdi | Hacker News Reader

Could someone explain (like I'm 5) why would I want to have stablecoin instead of the real currency?

Day trading bitcoin.

Broke: Transfer $1000US to exchange. Wait 3 days. Buy. Sell. Want to buy another coin. Need a new exchange. Withdraw. Wait 3 days. Send to new exchange. Wait 3 days. Buy new coin. Pay income tax. Send passport photos to anonymous stranger.

Woke: Transfer $1000US to exchange. Wait 2 days. Buy tether. Buy sell wrapped instruments on different chains using smart contracts NOT exchanges. Never wait for traditional finance. No KYC from strangers in foreign places. No income tax!

Satire some, but true.

TLDR: Smoother gambling.

Do transfers in the US really take three days, rather than a second or so?

In a country where cheques are still common, does this surprise you?

Not sure about the US but my SEPA transfers in the EU frequently do take 2-3 days (sometimes it's instant but at least with my German bank account it often isn't).

Simple solution: threaten to sue. SEPA transactions have to be done within a banking working day by law.

Now if you transfer on a Tuesday and the bank is closed on Wednesdays - tough luck, they're allowed to take till Thursday.

But there's always the option of doing an "instant" transfer if you're willing to pay extra.

My German online bank, N26, does free “instant” SEPA up to 2000 EUR. I think others do too but not all.

I did a SEPA transfer from a German N26 account yesterday and I have a message in the app that it might take 2-5 business days to reach the recipient. Instant transfers aren't universal.

> Do transfers in the US really take three days, rather than a second or so?

They take about thirty minutes (Fedwire), given banks’ antifraud procedures. That said, I can wire moderate amounts (generally, less than $25,000) in seconds to known counterparties. There are also P2P rails like Venmo for small, instant transfers, though that’s a gross settlement system.

It can take 3 days for the amount to show up on an exchange, due to regulatory checks or holds applied by the exchange. Coinbase is famous for accepting deposits then immediately locking them for several days while they verify the account.

Not in the US so might be better but some of the time can be on the exchange end

Wouldn't you still have to go through KYC when you cash out your USDT?

Yes but you can do this with one exchange you trust rather than multiple exchanges.

In most (all ?) countries except US, you are not taxed for crypto to crypto conversion. However you are taxed when you convert crypto to fiat. For example if you want to secure your bitcoins benefits by converting them to 1M USD, in France you should pay 300k USD (30% flat tax). But if you convert them to 1M UST, or USDT, or USDC, or whatever, then you pay nothing.

So using stablecoins is a way of securing volatile crytpo assets for any period of time, while not having to pay taxes immediately (only when you decide to convert to fiat)

Of course this makes sense only if the stablecoin is actually stable ...

You're not taxed, because the tax authorities rely on self-reporting. Trading one asset for another asset is ~always a taxable in most (all?) countries.

Well not in France at least, and as far as I know this is the same in most EU countries. I do not really know for Asia and Africa though, but I only ever heard of US (and now of UK).

I will add that in some EU countries you are not taxed at all (assuming this is not your day job), even when converting to fiat ! Portugal, Belgium and Germany. Also Switzerland (not in EU)

You are taxed on this in the UK: https://www.gov.uk/guidance/check-if-you-need-to-pay-tax-whe... - it's an instance of these rules, which apply to most types of asset: https://www.gov.uk/hmrc-internal-manuals/capital-gains-manua...

Because you want to operate in a way that doesn't involve real currency, either on an exchange without any traditional banking arrangements, or perhaps one that doesn't wish to be regulated as dealing with real currency.

You may wish to avoid KYC/AML rules, you may want to avoid potential taxes incurred when changing to and from real currency, the exchange may wish to avoid reporting requirements too. You may wish to transfer large-ish sums around between exchanges without any traditional authorities being involved, and in a way that doesn't expose you to volatility.

More cynically, exchanges may or may not be able to get these stable-currency tokens (and this is more of a tether concern than UST) at a significant discount compared to real currency, or the exchange may wish to invent currency-like instruments that can be used on its platform without the need to hold real currency reserves.

You already do use stablecoins, you use BankOfAmericaDollar (or WellsFargoDollar or...), which is fully convertible 1:1 to USD - some exceptions may apply. Your BankOfAmericaDollar isn't backed by currency, it's backed by assets with variable values, and there's an insurance fund that may cover some of your deposits, again limits and exceptions may apply.

Unless you have tender in your hands, or a fedwire account, you don't actually have 'real currency'.

If Wells Fargo started offering 20% returns without FDIC protection I'd also be suspicious.

My dear home country uses exchange rate trickery to charge a 50% tax on remittances.

Sending USDT to my friends and family instead of USD allows me to give them money without the implicit tax, while having an exchange rate that's simpler to understand and not doesn't risk crashes like Bitcoin.

When you say

> and not doesn't risk crashes

are you intentionally writing !(!(riskcrash(bitcoin)))?

Because if that is what you wanted to say then I agree with you, but if you really wanted to say "doesn't risk a crash in value like bitcoin exposes me to" you do realize that that is simply untrue because no one knows the financial basis of Tether? Which means that at any moment it might go to 0?

I should add "assuming everything works at it should" at the end of my comment.

So...the benefit of cryptos is tax evasion? How novel.

When your country temporarily blocks people from buying foreign currency, and that "temporary" restriction becomes a 50% tax on all foreign currency transactions 10 years down the line (thus killing the tourism and services industry) you might think differently of this kind of tax evasion.

Keep in mind the local currency (which is the only legal way to save money) dropped 97.8% compared to USD since the block started.

Liquidity is an important factor.

So how does your family convert USDT to USD?

>My dear home country uses exchange rate trickery to charge a 50% tax on remittances.

Would that have something to do with a recent war by any chance?

The country recently started a "war on inflation", which is being won by inflation.

The latest version of foreign currency restrictions has been on the books since 2019, so it's mostly about the government systemically being shit.

There is no difference. There are a lot of currencies. There are two reasons you might want to hold them:

- you believe they might increase in value or at least hold their value relative to other currencies.

- you need them for something (e.g. because you need to spend some) and you trust they won't decrease in value short term.

With any coin, as soon as you break that trust it becomes a problem. This coin is no different than Argentina pegging their currency to the dollar back in the day. Didn't work out either because their economy was still bad and they had to walk back their promises regarding that value. As soon as people stopped believing their coin was worth 1 dollar, it devalued by a lot. There are plenty of examples of 'real' currencies running into issues with their valuation. The Venezuelan currency was at some point cheaper than toilet paper by weight, for example. Happens all the time. Real currencies can be as unstable or even less stable than the shittiest crypto coin.

Ultimately the problem with a lot of these stable coins is a lack of regulation and mandatory reserves combined with dodgy market making magic bots that may or may not work as advertised. This one clearly did not keep up and now the reserves are gone and the trust as well.

My understanding is daytrading. Fiat on/off ramping is more involved, crypto-to-crypto is easy. So you can pretend to have USD while enjoying the convenience of cryptocurrencies (especially within an exchange, where next to no fees are involved).

Because not everyone in the world has access to a banking system and a stable currency.

I don't know about that, El Salvador's currency is literally the USD, and they still saw fit to let BTC be legal tender too.

One reason is so you can covert value into a stable asset during market downturns.

What if everyone decides to do that?

What if 10% of the people decide to do that?

What if it turns out that the number of $$$ that Tether actually has is much smaller than the number they imply that they have?

Some platforms offer non-negligible interest on those.

Even scammers need to feed their kids.

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