Thomas on Warpcast

Fred Ehrsam pfp

Fiat as a product is horrible for 2.6bn people. Crypto and stables can fix this.

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Thomas pfp

@aviationdoctor.eth

Crypto at large doesn’t fix this — most tokens are flaming garbage in which people get burned Stables don’t fix this — they’re pegged to fiat, so they’re functionally equivalent to holding fiat (with extra risk) There’s a point to be made about crypto as hedge against inflation but it needs to be much more specific to be helpful, otherwise it’s actively harmful

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Benido pfp

Is this true though for the countries named in the picture? The USD is illegal in Argentina. It’s basically impossible secure your wealth in Turkey. Yes, FIAT isn’t great, but stables are a solution in some regions of the world I think.

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Thomas pfp

@aviationdoctor.eth

Sure, but then it’s not just stablecoins in general, it’s specifically any stablecoin that’s pegged to a fiat currency that is itself stable over time (and not tied to either a highly fluctuating currency, or one of those “algorithmically pegged” stable that eventually falls apart — how many lost their shirts in Terra/Luna?). In an era where CBDCs are cropping up, that’s an important distinction. Otherwise there are more stable stores of wealth, including literal gold (which is why gold shops are a common sight in countries with uncertain currencies). I read the parent’s post as a generic statement about stables, but they are only as good as the underlying asset they’re supposed to peg to, and sometimes even worse than that. Where I live, for instance, we use the xSGD — a stablecoin pegged to the Singapore dollar, which has a good track record of stability but isn’t itself pegged to the USD, so who knows what might happen given the geopolitical risks in the region.

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Thomas pfp

@aviationdoctor.eth

And to add: if we’re talking about USD stablecoins in particular, they lost 22.5% of their value over the same chart period (cumulative USD inflation since 2019). So clearly even they don’t fix the issue — they only make it less worse relative to the absolute worst current performers cherry-picked in that chart. So I’ll make two general statements about stables which I hope aren’t contentious: 1/ they’re only as good, and occasionally worse, than their underlying currency when it comes to inflation hedge (worse in the sense that depegs can happen) 2/ they rely on trust assumptions about the issuers. For instance, I own zero USDT, because that’s my level of comfort w.r.t. their unaudited reserves. And even when proofs of collateral exist (USDC), it’s still a “trust me bro” situation that the token will be redeemable; which is about as antithetical to crypto’s trustlessness as it gets. So I hope that stables don’t become “the fix”, they’re just TradFi in thin disguise

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