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Comment by jqpabc123 | Hacker News Reader

How it it different from what banks do? (Except for a central regulator.)

Your exception is the answer.

Only the central regulator can "mint" money and doing so has real world consequences. The central regulator has financial incentives to limit this sort of activity.

The bizarro world of crypto has no such regulation and as a result, it is inherently unstable.

The proof of this is right in front of you --- it is the fact that "stable coins" exist. The only way to bring stability to the bizarro world of crypto is by tying it to "fiat" --- which is the very thing crypto is supposedly working to eliminate.

Contradict and hypocrite much?

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I saw a quote somewhere:

>Crypto is speedrunning the entire evolution of finance to end up at the same place

I saw a quote somewhere:

    Those who don't learn from history are doomed to repeat it.

The only thing new about crypto is paper has been replaced by electrons.

Individuals/banks minting their own money has been tried before. It didn't go well.

However, this quote is usually intended to be a warning, not an opportunity to run all the old scams again.

These people hear it and think "You mean we get to repeat history?!"

It’s not an uncommon joke about how easy it would be to be a serial killer or bank robber in “the olden days” - just need to move 1 town over and you can do it all again which has a strong similarity to being able to commit crypto crimes with hardly a consequence by virtue of doing it across jurisdictions..

I sure hope we don't end up in the same place where the monetary system is only being held up by the fact that there is more debt than money creating an endless competition for the limited quantity of money that exists in order to pay off ever-increasing debts and expenses with a currency that is continually debased throughout the process.

We're already there. That's called "going to the moon". That's the end state. Get in, ride the rise, and then sell out and tell others to "buy the dip".

We crossed that point years ago. It's the stablecoins that hold all the debt and use it to back their "dollars."

They are being loaned ETH to cover withdrawals and prevent what would amount to a bank run, not stablecoins. This entire comment chain is stupid and pointless.

False. Money on your bank account is backed by bank's assets, not by the central regulator. Recommended reading: https://en.wikipedia.org/wiki/Fractional-reserve_banking , M1 money supply, etc.

> The only way to bring stability to the bizarro world of crypto is by tying it to "fiat"

False. It's possible to make stable-coins using just price oracle and collateral. "Fiat" is not necessary. E.g. https://www.liquity.org/bold

> False. Money on your bank account is backed by bank's assets, not by the central regulator. Recommended reading: https://en.wikipedia.org/wiki/Fractional-reserve_banking , M1 money supply, etc.

You didn't even finish reading the first paragraph.

> Bank reserves are held as cash in the bank or as balances in the bank's account at the central bank

The collapse of svb shows how much the central regulator cares about making sure the entire banking system doesn't fall apart, too.

With the way you remarked "false" at the OP, though, I don't expect you're here for an engaging and educational discussion, so I'll leave it here. lol

It's possible to make stable-coins using just price oracle and collateral.

Most attempts at "algorithmic" stable coins have failed. See TerraDollar, Luna and Titan.

Over-collateralized stables are different from "algorithmic": the algorithmic ones are not fully backed by reserves.

They are very capital inefficient and still can fail during black swan events.

the algorithmic ones are not fully backed by reserves.

And you just know that the "collaterized" ones are? In most cases, their books aren't open. And they wouldn't lie about this would they?

In some strange way, the crypto brain has been programmed to ignore the obvious with a hand wave and just accept all the chicanery that is crypto.

I gave you Liquity as an example. They don't have "books", it's a smart contract which takes ETH as a collateral and lets ppl to borrow LUSD against it.

Maker initially worked same way, but eventually they started accepting off-chain collateral.

Regarding fractional reserves...

https://www.federalreserve.gov/newsevents/pressreleases/mone...

>the Board has reduced reserve requirement ratios to zero percent effective on March 26, the beginning of the next reserve maintenance period. This action eliminates reserve requirements for thousands of depository institutions and will help to support lending to households and businesses.

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