It sounds great, but every time I see this argument, I end up going down the rabbit hole of actually studying how stablecoins operate. And every time, I come to the same conclusion: they always rely on trust in an off-chain oracle or custodian. At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.
Bitcoin (and possibly a few others) is one of the few uses of blockchain that actually makes sense. The blockchain serves the currency, and the currency serves the blockchain. The blockchain exists to provide consensus without needing to trust any off-chain entity, but the blockchain relies on computing infrastructure that has real-world costs. The scarcity of Bitcoin (the currency) and arguably-fictitious reward for participation in mining is the incentive for people in the real world to contribute resources required for the blockchain to function.
Any real-world value given to Bitcoin is secondary and only a result of the fact that (1) mining infrastructure has a cost, and (2) people who understand the system have realized that, unlike fiat, stablecoins, or 1000 other crypto products, Bitcoin has no reliance on trusted, off-chain entities who could manipulate it.
You trust your stablecoin's issuer that they hold enough fiat in reserve to match the coin? You might as well trust your bank, but while you're at it, remind them that they don't have to take days to process a transaction - they could process transactions as fast as (actually faster than) a blockchain. But I imagine most banks would point to regulation as a reason for the delays, and they might be right.
So what are stablecoins really trying to do? Circumvent regulation? Implement something the banks just aren't willing to do themselves?
> a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.
Stablecoin is not a technology. It's an excuse. An excuse to do what banks do while not being regulated like a bank or using the infrastructure banks use. Similar to how Airbnb is not a technology but an excuse to do what hotels do without hotel's license.
So it makes no sense to compare it to database, a technology.
Will this excuse work? Banking is a heavily regulated field so it's less likely than Airbnb, but it's ultimately up to lawmakers.
Large banks like JPMorgan Chase are also looking into launching their own stablecoins, just because it has less regulation than normal banking. In fact Jamie Dimon himself says so. The idea is really simple: creating stablecoin deposit accounts for customers allows banks to skip existing customer protections that are normally afforded to traditional deposit accounts.
Stablecoins will end subject to just as much regulation as a normal bank, maybe even more.
JPMorgan Chase, BofA, and their ilk have R&D budgets large enough to have already launched a dozen stablecoins by now. They haven't, not because they can't (on a technical level) but because they don't actually see the value to it (on a business level). They're simply paying lip service to crypto because it pumps up share value, the same way every business was bragging about their AI investments just a few months ago.
Banks are already using stable coins internally (case in point https://en.wikipedia.org/wiki/JPM_Coin) it just hasn’t been made available externally yet.
Clicking just a few links down on that article shows that JPM Coin is a Blockchain in branding only. It's backed by a centralized (in trust principals if not in compute) ledger and used for transactions between mutually-trusting parties.
Outside of the U.S., Uber is subject to taxi regulations in most of the places it operates.
In the U.S., it is subject to a new set of regulations governing "rideshares" that are similar to the regulations governing taxis. The primary differences are that medallions aren't required for rideshare vehicles, nor are rideshare drivers required to know anything about the location in which they're driving.
Objectively speaking, the taxi drivers and companies that are still alive today provide better service than their rideshare counterparts. I can tell a taxi driver "the Z building" at the airport and they'll know what it is, where it is, and how to get there. Most rideshare drivers need to look it up, and they'll be damned if they actually follow the google directions to get there without getting lost on the way.
I’m pretty sure most rideshare services are forcing drivers to use their own map software. They aren’t using google, at least directly, and they are using routes recommended by the ride sharing companies themselves. Just replace them with AI already, Waymo was really good when I tried it in SF. Not technically ride share anymore though, I bet we see robo taxis eventually regulated like taxis when they eventually take over the market.
> Large banks like JPMorgan Chase are also looking into launching their own stablecoins, just because it has less regulation than normal banking.
That always works out great.
Can't wait for the next explosion, followed by government bailout, followed by some portion of all our wealth vaporizing, all to the benefit of a small number of people.
Yes — similarly I work in cryptocurrency and constantly try to tell people that credit cards are unbeatable for payments because of the consumer protections. Chargebacks are an insanely consumer friendly feature. Nobody ever wants to engage in that conversation.
Other way around. Stablecoins are essentially Venmo for crime. They get zero benefit from a blockchain. They are centralized, trusted and permissioned. Circle can freeze the USDC in your self-custody wallet at any time and you’re on your own bud. This whole thing is antithetical to crypto’s core ethos.
You could replicate USDC with a website where you log in with a password and move money between numbered accounts and they don’t run any AML/KYC checks on you. If you did that it would be super illegal. In fact someone did exactly this, it was called Liberty Reserve and everyone went to prison.
But because it’s got the magic of the blockchain laws don’t apply.
Making everyone jump through hoops, at great expense, because the proceeds of crime are being laundered seems like the wrong way to approach stopping crime. I'd argue that bitcoin is in some ways more traceable, as all wallets are public.
Problem with KYC and AML is that if you listen to the regulators, there is no end to it, the requirements only increase. I was once asked to provide 20 years of banking receipts for a small savings account that my grandmother had opened for me when I was 5. In the EU at least, it's common for banks to block transfers between countries, even if the transaction is well-documented. The most infuriating thing is that there's no real proof that AML works. It's just excellent at false positives, ending in account freezes for innocent people.
Stablecoins' success is also a reaction to the ever-increasing friction created by overreaching regulation. If you have a supplier in China, and need to buy some in-demand goods, you can sign the contract and send the money now, whereas with the classic banking system, you'd have to wait for two weeks to clear everything. This alone is brilliant and should be welcomed for its usefulness.
What is interesting with stablecoins is that they are on the blockchain, which acts as a decentralized, uncensorable ledger which doesn't require you to tell a bank clerk what is written inside your wedding ring to be allowed to buy a second hand BMW in Poland.
The law says that banks need to do AML/KYC, a blockchain is not a bank, it's decentralized. Besides, being able to break a law can be good, when such laws have little to do with crime prevention, and more about feeding an industrial complex that earns from those frictions. And buying a car is not illegal as far as I know.
The main proponent that dictates the regulations, the FATF, is a shady, unregulated body that is used for political and economical repression.
it's not about taxes, it's about fighting illegal activity. Terrorist financing, drug dealing, human trafficking etc - do you really think it's a good idea to let those actors exchange payments freely?
Yes, I think everyone should be able to exchange payments freely.
Drugs should be legal, so that's not a problem. Terrorism and human trafficking are more complicated topics, but basically I think they should be attacked more directly, not financially.
The government has existed for hundreds of years before these sophisticated mechanisms of surveilling the money system and the people were introduced. And it will continue to exist should they be removed.
You know everything was shit hundreds of years ago right, the wildcat banking system collapsed into miserable failure and the bearer instruments were eliminated because of the risk of train robberies.
What is your source for stablecoins being "for crime"? I've seen many individuals from countries all over the world utilize stablecoins in ways legal for their jurisdiction.
> The devastating impact of these scams is evident in the staggering losses reported globally. In 2024 alone, cryptocurrency investment fraud, largely driven by pig butchering schemes, caused over $5.8 billion in reported losses in the U.S. The anonymity and cross-border nature of cryptocurrency transactions have historically made these scams incredibly challenging to investigate and prosecute, allowing criminal syndicates to operate with relative impunity.
I don't think that logic checks out. It being "slower, riskier, with less protection and usually more expensive" are not properties that self selects for criminals.
Stablecoins typically being self-custodial, easier to transfer in large amounts, and internationally accessible seem like it would support criminals, but with stablecoins, funds can be frozen just like bank deposits can.
This is emphasized in the article you linked:
> The investigation began in late 2023 when Tether, the issuer of the USDT stablecoin, proactively froze 39 wallet addresses containing $225 million in stolen USDT after detecting suspicious activity. This immediate action was critical in preventing further dispersion of the illicit funds. Paolo Ardoino, CEO of Tether, was quoted as saying, “Tether’s work with the Department of Justice underscores our commitment to transparency, proactive engagement with law enforcement, and the protection of users across the digital asset ecosystem.”
And the number you quoted is for cryptocurrency at large, not stablecoins. I imagine the number looks a lot different when we filter for that subset of usecases. For the large amounts used in stories like this, banks would be a better indicator for comparison[1][2]. Venmo, Cashapp, and Zelle have had their fair share of scandals as well[3].
Tether has been reluctant in many cases to freeze addresses reported to it. At least historically it would not do so if the coins didn’t belong to its direct customers (mostly the large exchanges), rather than individuals who got them from their customers and did crime.
The other major issue is it’s easy to get the stablecoins, move them around, cash them out, and by the time Tether freezes them the criminals have already been paid (in dollars, which is what they want really).
Even criminals don't want the insane volatility of vanilla crypto, and there's an unfounded sentiment that Tether doesn't freeze value in people's wallets (they actually freeze more than anyone else, and good luck resolving it in Salvadoran court if they even have jurisdiction).
Yes classical finance has had scandals because they're obligated to prevent these things, and in general, they have responded to court judgements by upping their internal controls. Crypto is built specifically not to have either internal controls or the ability to institute them in a meaningful way. It's the fundamental premise. One system is designed to stop this activity but fails sometimes, the other is designed to allow this activity by anarchocapitalist libertarian ethos and offers roughly zero recourse for those caught up incorrectly.
This argument is tantamount to "well, a plane crashed, so obviously the FAA doesn't provide any value, and we should just stop regulating aircraft entirely and yolo it." Same with drugs, well, a side-effect happened, let's just scrap the FDA and legalize the grey market Chinese sackloads of $5 peptides. While we're at it, we should let Walgreens sell em, why not.
If you think what the classical institutions are doing is wrong, you shouldn't say well, just let 'em lol, you should be arguing for stricter penalties and more control. If you think it's right, well, I don't know what to say.
Pepperidge Farm remembers when nobody in their right mind would just give all their money to unregulated offshore banks in the Caribbean. Remind me why that was again?
The comparison is wrong. FDA is not there to confiscate anyone's money by locking down their accounts. FDA regulation is applied to companies. KYC is the US shit which applies to anyone, anywhere in the world outside the US, having the priority above local laws.
stablecoins are not for crime actually, it's like the bank of the criminals.
for crime you would want to mix your stablecoins to btc or xmr, probably the latter.
Just to be clear, Tether and Circle also have complete control over their respective stablecoins if they so choose. They have the exact same power to reverse, freeze and block any transaction or balance just as PayPal and Venmo do.
An implicit fee by not paying you any interest for money held in Venmo.
Also notice there's no option to automatically transfer received money into your real checking account. They are banking on you forgetting your money is there and they are earning the interest but not passing it to you.
For this reason I prefer receiving money via Zelle but pay with Venmo.
What? How so? If by "stablecoin" you just mean "any USD-denominated balance maintained by a third party in a ledger" then every bank balance is a "stablecoin".
Do we have a term for this phenomenon yet? Airbnb is a great example. Uber is another. Regulatory loopholes are the way that these companies actually make money, but they call it "technology" and everyone kind of shrugs.
Airbnb was a bit more then a regulatory loophole, it at least started out as a new way for private homeowners to monetize one of their greatest asset. So it was much more an unused potential that was being tapped in.
The regulation that came after has in my personal experience privatized airbnb and now it's hard to find a private renter, when I started using it that was the standard.
Once Airbnb became systemically harmful, regulation followed.
Nobody cares about small tech companies breaking the law for a few users.
Everyone cares about {insert bad outcome from mass regulatory avoidance}.
(Also, of the 3 airbnb founders, one has delusions of being the next Steve Jobs and turning it into an everything app (Chesky), another now works for DOGE (Gebbia), and the last is sucking up to Chinese government data requests (Blecharczyk)... so, yeah, not exactly the sort of folks that should be trusted with light regulation)
I know many many friends who were able to survive an expensive city because of it. Cities that are largely messed up due to the governments stupid games with taxes and interest
In my circles we have been calling it unregulated free market capitalism, or laissez faire capitalism.
More examples include Uber to bypass taxi regulation, and generative AI to bypass copyright regulation (as well as consumer protection regulation in both cases as well as labor protections).
In unregulated free market capitalism, there would be no free supply of unlimited land for roads for Uber & car companies to arbitrage into profit - they would have to have bought land & built infra all of which would make using vehicles for one person completely uneconomical. This would be much better than the status quo - freight & transit would be relatively unaffected by having to pay for land since they they both very efficient.
Similarly, in unregulated free market capitalism, there would be no copyright to bypass.
I am not trying to argue that either of these area panaceas but I feel like we are often in denial about how much collectivism is involved in the things we don't like about capitalism.
The claim (or rather the joke) isn’t that Uber was operating in unregulated free market capitalism, but that Uber is unregulated free market capitalism. A more accurate (and a non-joke) way to describe this is to observe that Uber’s only innovation was to find a way to operate in an unregulated marked while all their competitors remained regulated.
eh.. so long as Uber (or any other privately owned & operated vehicle) is getting free land & pavement, they are effectively operating in a collectivized, regulated market.
Yes ofc, on one specific aspect of regulation - the total qty of cars allowed - they did an end-run. But regulating the total # of taxis was always just a way of trying to limit land consumption by cars, rendered ineffective by only applying to cars used as taxis instead of all cars, all vehicles. So yeah, they benefited from a titch less regulation, but land in cities is so valuable that to give it away for free dwarfs the value gained from skirting any other regulation, so IMO it's still largely a collective non-market endeavour, just organized for the benefit of ppl in cars, rather than the public at large.
What we're talking about is a much more specific phenomenon than "unregulated free market capitalism". In fact, in an unregulated market, there would be no regulatory arbitrage opportunities, by definition (e.g. Uber would have no reason to exist since taxis would already be unregulated).
The idea of the argument (or more accurately the joke) is that Uber is unregulated free market capitalism. It is what happens to the taxi market if they would lift all regulations. Uber’s whole “innovation” was to find a way to be unregulated while most of their competitors were still regulated.
I need to clarify, parent asked how does a user use AI to bypass copyright. But I answered how an AI company uses AI to bypass copyright.
I am under no illusion that if a user of AI requests an image of Indiana Jones and uses it in their art, the rights holders will issue a takedown an would succeed. The AI company that owns the model that generated the model will however not face any consequences, and have therefor successfully have bypassed copyright protections.
Well, doesn't that specific meaning apply here? I mean, the lack of protection for end-users is at first compensated by investment money (low prices and huge effort on support). Once network effect is reached, the unregulated nature of the platform shows, end-users are wronged, only providers profit from the lack of regulation ...
Or maybe I don't understand the meaning of enshittification?
No. The whole point of enshittification is that it is an intentional process, a bait-and-switch. You get a cool free service, you become dependent on it, and then they start monetizing it and limiting it.
My understanding is it is more tied to crafting UX that maximizes profit. Many cases involve both enshittification and regulatory arbitrage (as a peer comment so eloquently put it)
Yes I know, which is why I looked up the Wikipedia definition to make sure I was using it correctly.
Stripe provides a trusted service to its users, has a great reputation, then implements changes that will degrade that service by avoiding regulations designed to protect the consumer.
Personally, I think US banking needs something an Uber or AirBnB style shake-up to get their act in order.
It's awful how behind the times the US is when it comes to banking. 2 - 3 days to get money from one account to another is beyond embarrassing in the modern day. It took the US something like 15 years to get chip-and-pin.
Banks are still these monolithic entities that don't care to innovate or listen to customers because "what are you going to do, go to one of the other 4 monoliths that are all in cahoots with each other"
Other countries managed to regulate their banks to innovate just fine without blockchain technology, though. It doesn’t always need a startup to disrupt something by flipping the finger to lawmakers. Sometimes humble regulation is enough. Take SEPA as an example: I can transfer money free of charge to any European bank account, in a few seconds.
US banks literally collapsed the world financial system in 2008. You don't deserve humble regulation after that. They got, and they deserved, the Dodd-Frank Act, which has now been significantly rolled back.
> Sometimes humble regulation is enough. Take SEPA as an example: I can transfer money free of charge to any European bank account, in a few seconds.
SEPA was a success but it was only a first step to modernise the banking system. The following regulations/directives like PSD2 failed in my opinion.
The ECB also had one of those CBDC built much earlier than people have been told. They already had something quite advanced around 2020, with a optimist launch date in 2022 I believe.
It obviously failed miserably and I read a few weeks ago that they are "exploring Ethereum and Solana for digital euro launch".
I would be curious what happened exactly but my guess is the banks just said "NO WAY".
SEPA allows this in theory; in practice, for amounts >10k€, most banks will require you to provide proofs for the transaction due to the maximalist AML laws in the EU.
My bank requires me to download a PDF on their website, print it, fill it out by hand, scan it, and then send it by mail. After a few days, someone will decide to allow it (or not). If it is refused, I don't get any reason why and have to call the client service for clues.
> The ECB also had one of those CBDC built much earlier than people have been told. They already had something quite advanced around 2020, with a optimist launch date in 2022 I believe.
> It obviously failed miserably
They had a CBDC but hid it from everyone... but then somehow it failed miserably. If it wasn't released, how? They even had it before they decided to have it (2021). This seems just like a load of bullshit.
When they saw Bitcoin and Ethereum they obviously understood a great disruption was coming and acted on it. SWIFT too.
A Central Bank do not share everything they consider/plan with the public. It is not really hidden or secret, but they also do not make a press release about it.
Also if they are fundamentally gonna transform our banking system they better start early because a lot of things can go wrong. I estimate the time to build such a system is about 10 years if everything goes well.
I do not know exactly what went wrong, my guess is the banks pushed back as much as they could because most of them would have been made irrelevant under that model.
Now they are talking about Ethereum and Solana because they understood they have to fight against the Dollar in this arena.
> I don't know about you, but I'd rather use a system that allows me to do what I want with my funds without anyone else controlling it.
How do we know that this unusual transaction is you doing what you want and not someone else controlling and defrauding you?
A small well-understood amount of friction that significantly reduces everyone's risk is not an attempt to control your funds.
Old systems with arbitrary delays based on twentieth century processes should be replaced, but not everything needs immediate infinite speed to be valuable.
> How do we know that this unusual transaction is you doing what you want and not someone else controlling and defrauding you?
That's what they'd like you to believe, but fact of the matter is that you're still not protected. For example, at my last company, the finance department was phished into changing a bank account number and transferred $50k to another account. Bank just shrugged.
Do you want to live in a world where everyone else can do whatever they want with their funds without anyone else controlling it, though? Seems pretty optimistic for anyone to think they'd do well in that world.
I want to live in a world where responsible, law abiding citizens can use their money however they choose.
In the US, we already have credit scores, a system meant to reflect some sort of trustworthiness. Right now, it mostly determines your interest rates and access to capital. But why not extend that trust to granting people more freedom in how they use their funds?
If I want a large loan from my bank, I’m forced to provide endless paperwork and deal with people, despite having a great credit score. In DeFi, I just post collateral and instantly borrow against it. No gatekeepers, no conversations.
These limitations become even more obvious if you’re a nomad or frequent traveler. Suddenly you’re not just facing your local government, you’re up against borders and layers of extra regulation.
If you want to buy a house and you need a loan, it is a deep investigation into your bank finances.
If I have the money for a down payment, and I want to buy a house, I don't need someone poking around at my finances, even if I have nothing to hide.
> Usually people getting loans don’t have the funds in cash already.
Source? People get loans for all sorts of reasons. Loans are backed by some sort of collateral and if that isn't assets, it definitely involves having someone look at your records.
> Defi is nothing like that its currency speculation at best.
Wrong. DeFi itself has nothing to do with speculation. There is $57B locked up in AAVE on ethereum alone. It isn't a toy.
Neither Uber nor AirBnB got anyone’s “act in order”.
Uber just captured wealth via operating at a loss until competition was absorbed or destroyed.
AirBnB just helped further drive up the prices of single family homes and didn’t really have much effect on the hospitality industry at all - it caused a minor observable loss in profit which ultimately resulted in nothing.
Outside of maybe NYC, taxi service in the U.S. was totally unreliable before Uber/Lyft. It's not even a matter of price. It's so much easier to get a ride now in most of the country.
I don't think AirB&B really improved hotels, but it did organize and centralize the "vacation rental" market, making it easier to, for example, rent a beach cottage for the weekend.
Existing Taxi services did not improve - they were replaced by a lower quality, more expensive alternative with a lesser economic infusion to local economies.
Hotels and the hospitality industry did not improve at all.
None of those points refute me or support the argument I was contesting - that a “uber or airbnb of banking” would cause banks to “get their act in order”.
Banks have banded together to create Zelle for mostly instantaneous payments for individuals. As far as transactions between individuals, moving money quickly is a solved money. As for moving money from individuals to businesses, taking a long time gives customers more "float" and more time to earn interest, and it is a feature not a bug.
There are other issues to consider in the payments world. For example, I may not want my payment data to be used for marketing purposes[1] or have my payment processor block my steam purchases[2]. I'm skeptical that Stripe will deliver on those gaps though.
> 2 - 3 days to get money from one account to another is beyond embarrassing in the modern day
I've had next day ACH between all my various accounts for years now. Wires have also been a thing basically forever though most people need to pay to send and receive them. Same day ACH and FedNow are both out there too, though I've yet to see widespread implementation.
The activities you listed are not the main business of a bank. It's getting deposits and loaning them out with interest. In that regard, they are very successful and it's hard to see how Uber or AirBnB would do better given the disaster of microfinancing.
What other countries are you comparing to? I did a multi year assignment in Germany and holy fucking hell does their banking system suck. It took weeks for my checks to be deposited and reconciliation times were longer. Not defending the US here by my only non-US banking experience was atrocious.
The question is why did you use cheques? I don't know anyone who is not American who has used cheques in the last 20 years or so. I have not been living in Germany in a long time so I can't talk much about the banking system, but I have had transfers with German friends and family which never took more than maybe a day or 2 within Europe.
You take a bad example and compare it to another bad example. Germany is well known to be behind the curve like the US. It's the only western European country I still bring a healthy amount cash when I go there. Wouldn't be the first time I had to pay parking with cash in recent times. Every where else this is a non issue. It's rapidly changing though, but I don't like the common in use PIN terminals as they have no way of hiding the PIN entry.
Now I'm not generally a big defender of Germany, but the reason for much more prevalent use of cash is largely privacy in Germany. And I sort of agree that handing all monetary transactions to the mastercard/visa duopoly is a terrible idea.
We are essentially trading the convinience of a tap for increased prices and unelected gatekeepers that can (and will) easily push sectors out of business, because they don't like what they do.
Regarding the parking, I much rather would be able to pay with cash than the $2 parking plus 50 cents cc transaction fee that you have to pay in many places in NZ.
Can you do fractional reserve banking with stablecoins where you lend out the underlying dollars to people and don't have full reserves? That's what makes banking tricky. When there are a surge of loan defaults across the banking system the money supply shrinks rapidly unless the government bails them out. Thus, the need for regulation.
One reason the U.S government has to like stablecoins is because Tether is one of the biggest buyers of U.S treasuries that they use to back their stablecoins.
> Can you do fractional reserve banking with stablecoins where you lend out the underlying dollars to people and don't have full reserves?
In a manner of speaking. You need to trust that the issuers have the reserve they claim. There's no way around this, unless the asset in reserve is equally ethereal (i.e. another cryptocurrency).
Tether, for one, almost certainly doesn't have the reserves.
Correct, this is fundamentally the oracle problem. There is no link between the blockchain and the real world which is why only money-like instruments have been successful for whatever value of success this constitutes.
First of all, wut. Second, that's irrelevant because stable coins rely on fiat backing (ostensibly) so you're stacking a new problem on top of what you perceive to be a different problem. If you believed that to be a problem then stable coins give you that problem twice as hard. And a whole mess of new ones too, like zero recourse against the newly intermediated offshore issuers in low-or-zero regulation locales.
Madoff Ponzi scheme also ran for at least 20 years. And yeah around 1% of total USDT supply is blocked so yeah Tether can very well live on those blocked funds:
I don’t discuss the past. In 2017 it was tether the one that caused the bubble that put BTC at almost 20k, by issuing tokens backed by nothing
Now they generate more than 10B per year in profits. And they have been using that to collateralize their usdt
It’s clear they are now fully backed. Another question is whether they want to comply with regulations (they don’t comply with MiCA, I doubt USDC does either) but that’s another question
Hate it or love it, they aren’t going anywhere anymore
Tether claims accounting firms won't audit them, but that sounds like a convenient self-serving lie to me:
> In an interview with DL News, he said the Big Four accounting firms — Deloitte, PwC, EY, and KPMG — are afraid to work with Tether because they fear it will damage their reputations.
> “None of the Big Four companies will audit us,” Ardoino said. But he said securing one of them as Tether’s auditor is a “top priority.”
It would be pretty stupid for Paolo to end up being naked, now that his business is printing money left and right.
To make it clear I am not pro tether, I am against visceral hate which was justified years ago but I feel it isn’t anymore. Tether gained my sympathy by freezing quite promptly funds from various hacks.
Circle on the contrary have failed every single time.
There is a grain of truth in what you say, but your conclusions are off.
Tether started as a way to pump the Bitcoin price, under the guise of better facilitating payments on crypto exchanges. They’d issue Tethers out of nowhere and use it to buy BTC and wash trade.
It was so successful it got to the level many people thought of it as “as good as dollars”.
This led to massive demand for it outside of Bitcoin pumpers - with criminals, sanctions evaders, money launderers of all kinds. Your granny needs to buy tethers to send money to the scammer she’s on the phone to.
So yes I do think they’ve probably moved away from issuing unbacked tethers. But only because they’ve found another niche which is also extremely suspect.
There is nothing to commend these guys. It’s a massive scam.
Garbage. An audit reviews a trail of origin. Tether got an attestation, that said no more, and no less than, "At this exact moment in time, the balance in this account is $X". You could take a short term loan for the majority of that and no-one would know.
You and I can't buy a house on a mere attestation of accounts - funnily enough, lenders want to see how we acquired that money. But these clowns can stand on stage at Davos and say "Yeah, we've banked over half a billion a day USD for the last two years, trust us, we don't need an audit". I know that comparing investment to revenue is not apples-to-apples, but to get an idea of what that incoming cash looks like? You're on the scale of Saudi Aramco. Samsung. Alphabet.
They kept firing their auditors. They had one done, and then refused to release it, saying "it was not of use to anyone because it was in Mandarin Chinese". What the actual fuck?
Their bad rep is their own fault.
"Tether and Bitfinex are completely independent and unrelated!" Oh yeah, why are the same two people who signed a loan contract on Tether's behalf ... the same two people who signed it on Bitfinex's behalf?
Or let's look at their bank, Deltec, who also made statements to "support" Tether... or specifically, let's look at some of the highlights from a fucking trainwreck of an interview their "Deputy CEO" gave to CNBC:
- was conducted from his gaming rig
- about Deltec's (and therefore Tether's) money movements being several times larger than all the banking in their country was due to people misunderstanding the country's two banking licenses, the names of which HE "couldn't remember right now" (the Deputy CEO of a bank who can't remember the name of the banking licenses where they operate?!?), and he "wasn't sure which [banking license] the bank has, but we might have both"
- oh yeah, said Deputy CEO's "resume": 33 years old, by his LinkedIn claimed to have graduated HEC Lausanne in Switzerland with a Master of Science at the age of 15... celebrating his graduation by immediately being named Professor of Finance at a university in Lebanon. While dividing his spare time between running hedge funds in Switzerland (called Indepedance [sic] Weath [sic] Management) and uhh... Jacksonville, FL.
Once CNBC's viewers started ridiculing and questioning both Deltec Bank and Tether, said Deputy CEO was hastily removed from Deltec's "Leadership Team" page on their website. Once that was questioned, he was re-added...
... and then the entire bank website was replaced with a low-effort WordPress template. Their online banking was Javascript hard coded to refuse all login attempts.
In FIAT money lending is the act of money creation, rather than lending existing money held in account. I’m guessing that wouldn’t have a parallel with stablecoins because the technology won’t let you just make new money at will?
> In FIAT money lending is the act of money creation
That depend on how you view money. Lending does increase the volume of money in circulation, in that sense it creates money. But that view is too simple to be useful.
The regulators that regulate, and in particular control reserve ratios (complex calculations that banks have to make about the relationships between their various assets) and base interest rates are the real creators of money.
The side stepping of those regulators is interesting. The conventional view is that it will lead to the same sort of financial instability as existed before the gold standard was abolished and we (pretty much the entire western world) moved to modern banking and fiat currency.
A hundred years of quite stable money was quite an achievement.
> That depend on how you view money. Lending does increase the volume of money in circulation, in that sense it creates money. But that view is too simple to be useful.
Far from being too simple, it is the primary method of money creation in modern economies.
> The regulators that regulate, and in particular control reserve ratios (complex calculations that banks have to make about the relationships between their various assets) and base interest rates are the real creators of money.
Simply setting rates does not create money. It can influence it, but it is not the ultimate cause. Lending is. Reserve banks can and do lend, but commercial banks are responsible for the majority of money creation.
The underlying feature of FIAT money creation is debt. And debt is a very natural thing (existing before money) that will just manifest in the crypto system instead.
Person B borrows $100, all the coins move on the ledger.
The ledger could facilitate the transfer while the bank maintains an "IOU" for person A's $100. The bank would be betting that not everyone will come withdrawing at once, just like a regular bank.
Regulation is the only thing that can prevent this from being done with any sort of crypto. The same IOU-based business model as happened with cash, gold, etc, could very easily be implemented using the technology. If you don't like fractional reserve banking crypto isn't a magic bullet that makes it impossible, especially since the general public probably wouldn't be sophisticated enough to know how to stick to "true" crypto vs "IOU-based fractional crypto facades."
But generally regulatory regimes have decided that the productivity advancements offered by the investment-through-loans of major portions of deposits are worth the risks. I don't think the GENIUS act allows this, though, so there's one regard where stablecoins are more-regulated. I worry about the edge cases, though - seems like requiring stablecoins to be paid off preferentially incentives using them for deposits, which could harm circulation if the reserves or followed, or which could screw over non-stablecoin deposit-holders if an institution doesn't comply and then goes under.
(This is closer to how regular banking works than the naive "banks create money by incrementing a number in your account." After all, banks are generally either (a) expecting those loans to be spent or directly giving the money to third parties like car dealerships or home sellers - which is likely to physically move the money to other banks, institutions, or cash, not just recordings in their internal tables.)
As far as I understand, the backing assets aren't on-chain. I give tether $100, they create and issue me 100 USDT on-chain. But they can take my $100 and lend it out. Now whoever Tether loaned the $100 to has $100 and I have 100 USDT so $100 has been added to the money supply, just like with a normal bank.
Algorithmic stablecoins[1] don't have a one-for-one backing in real world assets so can in theory create new coins "from thin air". The amount they can do this depends on the exact algorithm and the backing assets, and the practicalities of unstable crypto pricing make this difficult in practice.
For example the well-known DAI stablecoin[2] is backed by a mix of crypto assets, but is overcollateralized to avoid problems when one of the backing assets drops in value. The is sort of the opposite of "creating money out of thin air"...
Non-algorithmic stablecoins can do it by being backed by "high quality loan assets", in which case the conventional, non-crypto credit creation mechanism applies.
I gave you the most dramatic example. So far no undercollateralized, algorithmically backed $1 stablecoin has sustained a reliable peg at scale over multiple years.
Zero. Nada. There was always somebody somewhere exploiting it.
TerraUSD
USN
USDN
Basic Cash
All failures so far, every time a death spiral.
FRAX started as algorithmic and had to move to over collateralization
Same with DAI
You really can’t call them like that once they become backed by USDC
There are defi loans for example. You take an asset like BTC and loan stablecoins against it.
The underlying asset can be rehypothecated, Celsius did this before going bust iirc.
Tether is also the underlying backer of crypto market cap, and has never done an audit of their assets. They've made loans to various crypto market participants.
In theory there are auto liquidation rules etc. In practice humans have not yet managed to create a financial system they can't make asset bubbles with
That’s not the same though. Banks literally make money out of thin air when they extend a loan (oversimplified of course). They can choose the time and place to do so without having to wait for “checkpoints”. They can even run themselves into the ground by creating too much money (if there is no reserve requirement).
Banks make bank-account-dollars (a form of IOU) but they can't make cash-dollars. When you withdraw, the bank has to give you cash-dollars from its pool and can't just print some. Only reason they're considered equivalent is... uh... because I said so? And they're legally allowed to denominate their bankdollars in dollars.
Anyone can print IOUs, but not everyone can legally call them dollars. That's the only advantage banks have over the rest of us.
Same on the blockchain but without the privilege of conflation. You can have a smart contract that has $100 of ether but trades in 200 shares valued at $10 each. But the blockchain systems prevent you from pretending that bank-ethers and cash-ethers are the same thing. You can label them the same but they're not the same and the system knows that. Even Wrapped ETH, a contract that literally just prints and destroys WETH 1-to-1 with the ETH it holds, i.e. a full-reserve zero-fee bank, isn't interchangeable with actual ETH.
> An excuse to do what banks do while not being regulated like a bank or using the infrastructure banks use.
Stablecoins are much more heavily regulated than banks, being required to have 100% reserves under the GENIUS act, unlike banks who generally only ever hold on to 10% of the money you deposit with them.
Stablecoin issuers require much less regulations because their activity is auditable onchain. If they start misbehaving they get regulated by the free market - people will stop using the given stablecoin and move to a competition.
You think that the free market has regulated or audited Tether? I don't think so, that company is about as sketchy as it is possible to be, and yet it continues to dominate the stablecoin market.
They’re backed by treasuries and subject to treasury market shocks (like the March 2020’s dash for cash). Large redemptions can see a feedback loop of redemption -> rushed selling -> treasury market stress -> redemption. Exactly the sort of scenario one might expect as the secular trend of the weakening dollar bubbles to the market’s surface.
They're also the solution to many. Like any tool, they can be used well or used poorly. It's not really sufficient to call out that they can be problematic, it needs to be down that they are problematic in this case and that an unregulated system wouldn't simply trade present downsides with larger ones that the regular holds at bay.
> At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.
Except they are frequently _not_. I dislike crypto on principle, but you can't look at the exorbitant transfer fees and latency that a lot of banks charge for common transactions (Visa/MasterCard are especially bad) and say that crypto has no potential.
Yes, it would be easier if we could just trust our banks to offer instant settlement and very low fees, but they don't.
The problem with banks pointing to banking regulation is that they helped shape the regulation - and they did so to protect their business, not to help consumers.
We know that central banks are great at monetary policy. We know that decentralized protocols remove a lot of the more parasitic traits of banks. Why not have a central bank currency that can be traded on the blockchain, especially since converting it to real money will still entail KYC?
> Because literally the only point is to avoid the existing banking system and you can do that with a postures database with much less cpu involved.
Ethereum is actually very low resource intensive nowadays.
You can run a validator node on a RPI, a full sync node on a Intel N100 minipc with a big fast SSD and the "light clients" can probably run on something very small.
I have seen banks having to bring semi-trailers full of diesel generators to plug them to their mainframe because the current requirements were too high for the grid during big batch jobs.
I like crypto (I'm formerly in the industry), but that's not quite a fair comparison.
1. Running a validator is inexpensive in terms of compute, but there are 1,000,000 validators or something, which adds up to a lot of CPU usage. Of course, I think it's insanely awesome that you can run some code on Ethereum and it'll be replicated on 1,000,000 independently-operated machines, but it's not a very CPU-efficient strategy.
2. Banks doing those batch jobs probably had much higher TPS than ethereum.
> Banks doing those batch jobs probably had much higher TPS than ethereum.
Yes the platform running in most banks, usually built on what we call "mainframes", is still mind blowing and with incredible performance. Also just one of those CPU is about the price of a house...
Also the requirements I cited is for running an Ethereum mainnet "Layer 1" node. And most "TPS" happens on the layer 2s anyway.
So it is hard to compare technically. But one thing for sure is becoming an active participant in the Ethereum mainnet has a very low barrier. They got rid of the whole intensive "Proof of work" part about 5 years ago.
For a full sync node the waste is more at the bandwidth and disk levels.
Ethereum is able to process something like 150 transactions per second, using about 1,000,000 validator machines.
Postgres running on a single Raspberry Pi is something like 200 TPC-B read/write transactions per second.
Saying Ethereum “is not using very much CPU” is baffling to me. It is the state-of-the-art in this regard, and it uses something like six orders of magnitude more CPU than a normal database running a ledger workload?
First things first, I'm a crypto-sceptic - to put it in the mildest terms possible.
You're spot on with CPU usage. However: how would you design a RasPi-efficient, fault-tolerant, decentralised ledger with strict ordering and a transparency log?
Consider CAP. Existing banking systems choose partition tolerance (everyone does their own thing all the time basically), and eventual consistency via peering - which is why all settlements are delayed (in favour of fraud detection / mitigation), but you get huge transaction throughput, very high availability, and power efficiency. (Any existing inefficiencies can and should be optimised away, I guess we can blame complacency.)
The system works based on distributed (each bank) but centralised (customer->bank) authority, held up by regulations, capital, and identity verification.
Online authority works in practice - we collectively trust all the Googles, Apples, etc run our digital lives. Cryptocurrency enthusiasts trust the authors and contributors of the software, CPU/OS vendors, so it's not like we're anywhere near an absolute zero of authority.
Online identity verification objectively sucks, so that is out the window. I guess this could work by individual users delegating to a "host" node (which is what is already happening with managed wallets), and host nodes peering with each other based on mutual trust. Kinda like Mastodon, email, or even autonomous systems - the backbone of the Internet itself.
Why does it have to be decentralised (by which I assume you mean permissionlesss to join as a validator?)
The only reason for this - it would seem to me - is the ability to have nobody in control who can be subject to law enforcement.
If you need this kind of decentralisation blockchain, and all its inefficiency, is the only choice.
Societies should not require such things though. They need to have trustable institutions and intermediaries to function, in finance and many other areas.
> Societies should not require such things though. They need to have trustable institutions and intermediaries to function, in finance and many other areas.
...which is more or less the same conclusion that I've arrived at by the end.
Also the capacity is significantly higher with L2 included, and increasing rapidly.
With zkrollups and a decentralized sequencer, you basically pay no penalty vs. putting transactions on L1. So far I think the sequencers are centralized for all the major rollups, but there's still a guarantee that transactions will be valid and you can exit to L1.
Scaling is improving too. Rollups store compressed data on L1 and only need the full data available for a month or so. That temporary storage is cheaper but currently is still duplicated on all nodes. The next L1 upgrade (in November) will use data sampling, so each node can store a small random fraction of that data, with very low probability of any data being lost. It will also switch to a more efficient data storage structure for L1.
With these in place, they can gradually move into much larger L2 capacity, possibly into the millions per second. For the long term, there's also research on putting zk tech on L1, which could get even the L1 transactions up to 10,000/second.
there's 1,000,000 validators (defined as a public key), but you can run multiple validators per machine. Most estimates that crawl the p2p network to index nodes comes out at like ~20,000 machines
doesn't invalidate your point but it at least shaves off a few orders of magnitude
and a single PG node is not a fair comparison, we're talking 100% uptime global networks. Visa does about 70,000 transactions per second - how many servers do you think they run across their infra?
ZK rollups which greatly compress data on chain without losing security guarantees, combined with temporary storage using data sampling so each node only has to store a small portion of it. The zk rollups are live and support significantly more than 150tps today, and the data sampling goes live in November. There's a lot more work to be done but that puts the major pieces in place.
But with multiple parties involved, who has the rights to read and write to the postgres instance? How do we make sure transactions were not forged? How do we know data at rest is not being tampered with?
Blockchain solves that. Newer blockchain protocols especially an L1 is much faster, easier on the environment, and provides all the immutability, transparency, and traceability benefits.
You know you can just use regular cryptography to validate data, right?
Also, you always have to trust someone, in this case Stripe.
Regarding L1 blockchains, how exactly do they solve the speed problem for a distributed global database that needs to be replicated everywhere for the security guarantees to actually work?
> Yes, it would be easier if we could just trust our banks to offer instant settlement and very low fees, but they don't.
All transactions must be derisked (there is a fallback if the transaction fails). This usually means backed with reserves, which also means they cannot be instant.
Now if you don't care for the risk management of a bank, sure, go ahead and do what you would like.
This isn’t even the reason, because the reserve status can be immediately verified across institutions and is often backed by a sovereign in some way in case of a run and payment systems can circuit break, etc. There are legacy reasons depending on the bank network such as business hours and batching and liquidity optimization, but these are increasingly less meaningful and systems like FedNow and others offer instant and final transfer.
The real and continuing reason for the delay is to give time for repudiation and assessment of fraud, money laundering, and other financial crimes risk. The risk of instant transfer is instant theft or otherwise absconding with money that shouldn’t be yours. In fact settlement delay makes reserve problems worse because you effectively “hold” money that could potentially not be properly secured during the hold and cause a default on a transaction that was otherwise taken out of balance and pending transfer. Instant clearing and settlement makes this unambiguous. But it also makes transactions as risky as a cash transaction - instant and irrevocable.
For some customers this is legitimately ok. But by and large most customers benefit from the delays more than they’re hurt by virtue of having a window to repudiate a transaction that is illegitimate. It’s just they don’t recognize that value until they need it. We all benefit from a system that disincentivizes criminality overall. It’s hard to recognize it because we exist day to day with that benefit and it’s hard to prove the negative, but there were times without the protections against financial crimes and financial oversight and they were NOT better times. They were objectively worse, so our ancestors built a set of guard rails to prevent the endemic badness around us.
It appears though as they die off, and as we become less attuned to history, we are very busy ripping apart the guard rails our ancestors very carefully and thoughtfully built into our societies like some junior engineer who assumes every line of code written before them was written by an idiot. Take the American CDC as a case in point - the modern public health system was a very hard won victory against endemic diseases by generations - and as the generation who established it expires, we rip their legacy to tatters.
The US banks just won’t do it across the board unless it is mandated like ACH. Many in the banking system feel comfortable with this FedNow rollout taking many years. It’s ridiculous.
Last time I paid for something across borders, transaction has completed in less than 10 seconds and I got both updated state in outgoing bank account, and at the receiver side.
> Yes, it would be easier if we could just trust our banks to offer instant settlement and very low fees, but they don't.
How long is settlement for you and what are the fees. Are you talking about banks for credit card payment processors
A business needs a processor which will take fee and add some delay
> You trust your stablecoin's issuer that they hold enough fiat in reserve to match the coin? You might as well trust your bank
stablecoin issuers are for all intents and purposes banks.
they'll try very hard to stop anyone from calling them that, but in essence, they give you a note (a crypto coin, in this case) in exchange for a promise that they'll give you back the amount of fiat printed on the note. this is the primary purpose of a bank.
I think the most disruptive thing about stablecoins is the ability to opt-into your monetary system of choice.
It's hard for the average non-US person to opt-into the US financial system. Sure, they could hold dollars in banks, but local monetary policy can nix that privilege at anytime by imposing foreign exchange controls. It's happened before, in some of the largest economies in the world: China in 2015, India in 2013, Argentina in 2011.
The current way users solve this problem requires a lot of resources. That's why you usually only see rich people have Cayman accounts, Canadian real estate, and shell companies in Panama. Stablecoins on permissionless blockchains make this process 100x more accessible for the average person.
So yes, stablecoins currently let you circumvent regulation.
But regulation can be a prison where you can pay to be free.
So what happens when it costs nothing to get out of jail? What kind of strains do this place on economies that people escape, as well as the economies that people join?
This is as wrong as everytime someone says "the benefit of Bitcoin is you can just walk all your assets across the border!"
It fundamentally misunderstands how foreign exchange works, or how government backed currency works.
You cannot "opt out" of the local currency: period. It is the only currency which can extinguish tax obligations. And even if it wasn't government backed, you can't trade in a currency no one wants in the first place.
This should be trivially obvious from the observation that how much water a gold bar in the desert buys you is going to be pretty highly variable.
Just because badly managed local currency is required for taxes doesn't mean that most people in that country _must want_ to hold it. Plenty of trivially obvious evidence to the contrary
I assume you've never experienced hyper-inflation? If you have, do you think it's fair that you were forced into a hyper-inflationary currency? And, if given the means to, do you think it's fair that people _should_ have the ability to choose?
That's not the point: the point is "how do you buy the coin in the first place?"
If you live in a place then you have to trade in whatever the local currency is. You didn't "opt in" to a particular stable coin: someone has to be willing to accept that specific coin as payment.
And they can't just exchange it to another: the exchange has to want to sell that coin in exchange for the coin you transact with.
And to interact locally with the government, you need someone who is willing to sell coins in exchange for the currency you don't want.
In practical alternate market economies, the only currency which trades tends to be USD and the exchange rate will be bad because it's a grey market. I would go further and posit that where crypto has any impact, it's people because it's a window into being able to hold USD.
Certainly the only question anyone asks about Tether is whether they actually have the USD to cover their position: no one wants a Yuan based see stable coin.
I think it's pretty easy to buy the coins, regardless of government intervention. Countries (ie China, Nigeria) have tried and failed to restrict access to cryptocurrencies. Whether you get good execution is a separate issue- my point is that stablecoins enable you to execute these trades in the first place.
Agree with the posit- stablecoins grew a lot during periods of strict monetary policy (ie capital outflow from China starting in 2015, hyperinflation in 2023).
Note my original post said disruptive, not good. Meant it in the truest sense of the word; both good and bad comes out of it.
you’ll note that many countries that impose capital controls have large informal economies. this is not a question of theory, there are many countries where millions of people do hold significant sums in dollars and other foreign currencies, regardless of whether they fulfill tax obligation. enough people do this and you also get the informal economy transacting in these currencies. you are “proving” the non-existence of something that in actuality is practiced by millions of people every single day.
And now western countries can also have ultra corrupt, opaque and controlled by a small oligarchy group currency system, just like some 3rd world countries. Yay, progress :)
If someone spends significant effort to gather documents proving that their family was forcibly relocated from Poland, they may be able to become a Polish resident and then spend a year or so doing paperwork, bringing all of the documents that are required according to the official web site for some task to the appropriate government office where they are then told that other documents are required, or that nobody in that office even knows what documents are required, and so on, and after that time they may achieve Polish citizenship. You know, in recognition of the fact that their family is in fact Polish. But during that year or so, they may have trouble using the banking system because of sanctions on Russia and because no Polish bank will serve them until they become Polish. So their employer may be on the lookout for alternative payment rails.
The person you are responding to is not arguing there is not a use case for crypto in cases like this.
They are arguing that stablecoins, specifically, require an off-chain entity that ultimately control them. And if you have an entity actually in control, why go through the trouble of blockchain? Then you can just have the controlling entity run a normal non-blockchain ledger.
I like the argument elsewhere in this thread that the actual reason is that it allows running a bank while pretending it’s not, bypassing regulation meant to protect depositors.
> But I imagine most banks would point to regulation as a reason for the delays
There is also good regulation e.g. the EU made it so banks process transactions within "10 seconds", including and especially cross-border transfers for SEPA countries (Single Euro Payments Area). https://www.europarl.europa.eu/news/en/press-room/20240202IP...
So banks willingly being slow with transfers is perhaps a question for your local policymaker to remind them they can do better.
> they always rely on trust in an off-chain oracle or custodian. At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.
International wire money transfer is far too difficult today. And after you've sent it, you still need to wait minutes (hours?) for the receiving end's bank to actually process the wire and move it into the recipient's account (correctly).
Then you need to nag the receiving party to check their account every few minutes so that they can inform you that they actually did receive it successfully. What if they're in a different timezone? 12 hours off?
I can transfer money from Europe to Brazil in seconds with Wise. I press the button and the money is nearly instantly available in the Brazilian account via PIX. The same in the reverse direction is possible but only if you have a more modern bank in Europe, eg. N26 or Revolut.
I was thinking more of gp's comment "and the first user is an Argentinian bike importer that finds transacting with their suppliers to be challenging"
Wise isn't great for paying suppliers. Their business account limit for debit/credit is $2k, and for ACH is $50k. They have higher limits if you fund with wire, but then we're back at the starting problem again...
And still, you have no way of knowing that the receiving party actually got it. On a blockchain, the source-of-truth "database" is public.
My understanding is that Wise isn't a true international transfer. Wise has money already in a Brazilian account, and when they receive money in their European account then they send you money from their Brazilian account. If they don't have enough money in that Brazilian account then it can't be instant like it is today.
Not the full picture:
Wise is that big that it has already lots of local accounts and/or correspondent banks; so basicly "you get the money from Wise" but from a "local payment way/scheme" (to which Wise is connected in the background through several layers)
that we need one company to achieve such big scale that they literally are regulated in every single country and basically become monopolistic in terms of their influence?
a Blockchain based system can maintain similar effects but with a balance of power
> What stops someone at circle deciding to issue more usdc without real dollar backing
Well, the law now. The recent stablecoin legislation has a lot of new regulations.
If you mean what technically stops them, then nothing. But that's true of all the crimes I can think of, the law can only be enforced after the crime takes place.
My current best guess is that people are finding stablecoins valuable because they are effectively barer assets issued by an entity in another jurisdiction that has no requirement to surveil or control how those tokens are moved around between parties, and hence it allows you to skip a lot of the regulatory overhead you would normally have in dealing with a local bank. Of course this can be stopped by states eventually, but it helps when the jurisdiction of the issuing entity is allowing it.
- by USA government (indirectly) to re-dollarize the world without generating too much USA inflation, another IMF SDR mimicking China usage of foreign currencies to avoid hyperinflation;
- by many migrants in the I world to send money home, something in the III world could be converted to USD at a much cheaper rates and with much simplicity than classic banking/money transfer solutions;
- as a hedge against local currencies, considering dollar or some other currencies much more stable (see for instance the Argentina forcibly conversion overnight of USD accounts to ARS with enormous loss in 2002;
- as a decorrelated asset for DeFi trading on non-stablecoin cryptos (meaning market timing, buying BTC, ETH, SOL, ... when they dip, swapping then to some stablecoins when they top, waiting with the stablecoin for the next dip to buy).
In that regard the (unlikely) real existence of the collateral they claim is not much relevant: as long as most trade on stablecoins come from DeFi the Venezuelans, Bolivians, ... who choose them to bring USD home, the few company using them to pay B2B stakeholders in various countries are still happy anyway, as long as the stablecoin remain de-correlated to other crypto traders are happy anyway.
Tokenised stocks are more likely used to circumvent regulations since you can buy them swapping non-KYC coins against them avoiding capital gains taxes, at least partially.
The irony is that valid international transactions must be enforced with centralized rules, and thus a decentralized ledger like BitCoin can never operate in this space.
and yet millions of people do use crypto to do international transfer of dollar-denominated assets and don’t seem too concerned with whether it is valid or not when it is usable money in their pocket.
Stripe's a $90bn+ company because it builds & sells tools that make it easy for software engineers to programmatically move and manipulate money. This is a no brainer for them (regardless of how mainstream stablecoins/cryptocurrencies/blockchain eventually become)
Lots of things have a cost, and lots of things are difficult to manipulate. Bitcoin has value only because of speculation and the Greater Fool Theory. There's nothing fundamentally distinguishing BTC from any random shitcoin. Why is Bitcoin Cash worth so much less than vanilla Bitcoin?
Yes but bitcoin is essentially useless as an unit of exchange because it’s extremely unstable and deflationary nature. The only “logical” thing to do with it is to HODL.
The value of Bitcoin also depends on your ability to convert it to real world money, since contracts are denoted in real world money.
I'd argue the real value of money lies in contract enforcement. And I am talking about real world physical enforcement like police throwing you in jail. In financial engineering literature we don't really care about the real value of money, the only assumption needed is that contracts are enforced. If that is the case then you can hedge.
For example: You sign an employment contract where you get paid in USD. You also sign a rental and utility contracts in USD. If salary > housing cost, then you essentially have your housing needs hedged. You don't really care that USD has "real value". The value of USD lies in the fact that these contracts are enforced by the government.
The rarity of a currency is important in the sense that contracts don't make sense for all parties if the currency is too abundant. For example, if you can find USD laying on the street, then you would not work for USD. The rarity mechanism itself is not important.
When a stablecoin is issued on a public chain then the issuer cannot secretly censor transactions and the activity of the issuer in general is auditable.
You also get access to all the magical DeFi stuff.
Other than this you, as a person, don't need to be aligned with the current political regime you live in to open a stablecoin "bank account". This on its own is a huge breakthrough.
"they don't have to take days to process a transaction"
Unlike blockchains, banks are required to check the tx validity against fraud, money laundering, sanction lists, terrorist financing etc, must ensure funds could be returned if a mistake was made. They could not be processed on weekend or at night, because some transactions require manual review by human workers.
It is completely decentralized and doesn't use a flawed algorithmic stablecoin mechanism like Terra-Luna but rather creates synthetic cash exposure by shorting perpetuals against collateral the same way a TradFi investment manager would manage their asset allocation exposure. The perps are traded on DEXs and I believe the BTC and ETH is held in on-chain vaults.
This is a solid model and I believe the leading decentralized stablecoin.
Things like USDT and USDC are essentially tokenized real-world dollars. Nothing inherently wrong with that, for example the Eurodollar market has existed for decades, but it does require oversight that collateral reserves are what they are and also means they are not truly decentralized as you point out.
I like USDe, but it's not completely decentralized. You still have to trust whoever's trading the basis like you have to trust Tether/Circle to trade treasuries.
Hi, thanks for correcting me on that. It actually says right [here](https://docs.ethena.fi/solution-overview/risks/exchange-fail...) that they use CEXs to trade the derivative positions so I clearly didn't do my due diligence on this. I don't mind being wrong but I shouldn't have been spreading misinformation when I didn't know the details so I apologise for that.
I'm actually quite disappointed that this is how they implement the protocol because to me the main benefit of the hedged collateral model was that it was the one way to produce a truly decentralized stablecoin. Do you know of another project that implements the same mechanism fully on-chain and decentralized?
At first stable coins were to avoid taxes when selling and buying again by skipping the round trip to fiat.
But now, the use case Stripe is talking about is basically the equivalent of creating WoW Gold for companies, and bypassing state money entirely, but IRL.
This is a dangerous idea.
Big corps have become immensly powerful, but they are still kept in check by the state for 3 reasons: the monopoly on law, violence, and minting money.
Lobbying is taking care of the law.
And now they are coming for the money.
Crypto currencies were supposed to taken the power of currency from big actors and back to the people. It's going to take it from the state to companies.
Soon, they will effectively have more power than the state, and citizens will be screwed.
The only convincing explanation of the benefits of stablecoins I have seen is that it is a backdoor for implementing narrow banking, which libertarians love and economists and central bankers hate (as it would cut off credit to the economy).
A narrow bank is a bank that takes deposits but doesn't make loans, basically parks the cash at the central bank or into risk free instruments. So it provides you with payment facilities, very low interest rates, without the credit risk that comes with a large bank that has exposures to all sorts of risky businesses.
Everything else is either temporary benefits of arbitraging slow moving regulations (but KYC, consumer rights, money laundring regulations, etc are quickly catching up), or as you suggest, some non sense about a zero trust system (crypto / public ledger) that fundamentally relies on trusting a custodian (so you might as well use an oracle database and spend in licensing what you save in energy cost!).
I had tried to describe this effect recently when Trump lowered bank reserve requirements, urging traditional banks to buy stablecoins with the extra funds this gives them.
My comment was that it increased risk (less reserves), without any potential upside in new economic activity. Basically all the money would flow to the govt in the form of treasuries the stablecoin issuers buy.
As opposed to the banks, you know, lending money to businesses.
> Implement something the banks just aren't willing to do themselves?
I think that's it. We're very unlikely to see international transactions between banks happen as easily and as quickly as they can with a stablecoin, even though it's technically possible.
I think part of what makes it easier is that with crypto there's "no take backs" since it's largely impossible. Banks have to worry about fraud constantly because they're somewhat liable.
Bravo! I don't think it can be put more plainly than that.
> So what are stablecoins really trying to do? Circumvent regulation? Implement something the banks just aren't willing to do themselves?
They allow businesses to act like banks without obtaining a commercial banking license. Initially this circumvents regulation, but over time, it allows entities to outsource solutions for those pesky regulations (compliance, audit, etc.) to third parties.
Bitcoin makes the least sense of any of these schemes. Proof of work is just proof of sota ASIC ownership, which is just proof of stake by another name. Why not just use POS like everyone else and avoid dumping the carbon? Bitcoin is going to be one of those things in the history books that will seem utterly incomprehensibly irresponsible to future generations.
Bitcoin makes a lot of sense, if you don't want central banks to print your monies and devalue it. If you don't care about that, then it doesn't make sense for you. But really, the 21M cap is about only point that matters about BTC, the other features have to be there but are secondary.
Nope, still no sense. There are plenty of crypto projects out there that are less centralized, don't dump entire countries worth of carbon into the air, and still manage to have the same logarithmic distribution that Bitcoin does.
BTC was a first draft that somehow metastisized into a literal meme virus that consumes a stupifying proportion of the world power supply.
It's idea cancer. The fact that it continues to exist is a sign of a faulty memetic immune system in our species.
Phew seldom have I heard such a wrong thing. Bitcoin makes absolutely no sense as an actual transacting day to day third world currency because A) it is completely incapable of scaling to the task due to the projects allergy to sensible development hobbling it to 20 year old technology B) because of A, the transaction fees are many times the weekly salary or even yearly salary of those target users.
Bitcoin was an interesting idea. 20 years ago. It's entirely without merit now, but it will take decades to fade into obscurity, pumping out carbon the whole time.
Current bitcoin fees are 17 cents. Not anywhere near weekly salary.
Regardless, they don't need to use bitcoin for their day to day transactions. Just somewhere to put their savings that won't be inflated away. USDC would make much more sense of course.
Half of the world's population lives on less than US$2.15 a day. You're right, nowhere near weekly salary. Just three transactions a day will only use up 25% of their earnings.
> Just somewhere to put their savings that won't be inflated away.
What fucking savings?
And uhh, what are they doing, then, just making periodic conversions to fiat that is, as you point out, "inflated away"?
You're trying to have it both ways, "crypto is immune to inflation problems, that's why it's important to a lot of the world", and then when someone points out transaction fees, "Oh, you wouldn't really use crypto daily, you'd still use that fiat with inflation problems, you'd just keep your "savings" in crypto".
It is laughable how much fervor goes into these kind of statements that have had little to no critical thinking applied.
Empirically speaking the Bitcoin price has always fully recovered within a year or two, while there's not a single instance of a highly inflationary fiat currency regaining its original value (which would entail significant deflation).
>At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.
This is missing the fundamental idea behind blockchain. You need a consensus mechanism and immutable ledger in order for it to be secure and truly transparent. Once you add those boom you have yourself another blockchain :-)
>So what are stablecoins really trying to do? Circumvent regulation?
No, stablecoins have less regulatory burden because of the public ledger removing the need for manual review and verification by various intermediaries. They are still compliant with regulation.
> You need a consensus mechanism and immutable ledger in order for it to be secure and truly transparent
Consensus between who? The stablecoin issuer, stripe in this case, is a single party, who are they coordinating with that requires a consensus algorithm?
How does centralized SQL replication do consensus, compared to a DLT?
Blockchain consensuses: Which is the next block, Which protocol version must what quorum upgrade to before a soft fork locks in, Whether a stake should be slashed, Leader/supernode election (handled by the UNL text file in git in rippled, which underpins R3, W3C Web Monetization micropayments, and W3C ILP Interledger protocol (which FedNow implements)),
When there are counterparties and then they might as well just off-site replicate the whole database or blockchain locally, and run indexes and queries at their expense.
And then there is a network of counterparties willing to grant liquidity to cover exchanges that cover multiple assets and chains, who want to limit their exposure by limiting the credit they extend to any one party in the network and account for an entire auditable transaction. (Interledger ILP Peering, Clearing, and Settlement)
Private blockchain or SQL replication scaling woes? And then implement mandatory keys in an append-only application.
> It sounds great, but every time I see this argument, I end up going down the rabbit hole of actually studying how stablecoins operate. And every time, I come to the same conclusion: they always rely on trust in an off-chain oracle or custodian. At that point, a shared ledger implemented with traditional databases / protocols would be faster, easier, and more transparent.
I think the unspoken part here here is that the lack of transparency is a feature for some users.
I'm generally a cynic on cryptocurrencies and I think they're kind of terrible for society in a lot of ways, so none of what follows should be taken as a positive opinion on cryptos. I'm just explaining how they work.
There will always be two competing interests with regards to currencies:
1. On the one hand, consumers make mistakes and get scammed, and want reversible transactions.
2. On the other hand, sellers don't want reversible transactions: if you sell a bike for currency and the transaction gets reversed, you don't get your time back even if you get the bike back in mint condition--and getting the product back at all isn't always possible, if the product was a tattoo, a class taught, or some intellectual property.
In traditional financial systems, anyone operating a financial system in a centralized way always gets bullied into reversing transactions. If you're the bank running it, you just screw over the seller most of the time because they are too small not to work with you and the customers you bring, and buy insurance for the rest of the time.
With stablecoins, so far, this hasn't happened. Sure, if you complained to Circle about getting scammed in USDC, in theory they could just un-issue your spent coins and issue you some new coins, but that would be in violation of their entire crypto ethos. Like fiat, the value of the currency is only based in belief in the issuing central entity, but unlike fiat, part of that belief in the issuing entity is built around them not reversing transactions.
Will that belief be enough to hold it, forever? I don't know, but I think it's definitely a stronger power than people believe it is, even if it's not literally the power of electricity being poured into hashing.
As a side note: not all stable coins are issued by a central entity. There are two other types of stable coins I'm aware of:
1. Collateralized: Examples: DAI, VAI, and I think MAO. Basically, anyone can borrow (mint) these currencies by storing other assets in the protocol. So for example you can deposit $1000 worth of Ethereum into the DAI protocol and that allows you to borrow some safe amount of DAI which is minted on demand, say 400DAI. If the value of your deposited Ethereum falls too close to $400, the protocol automatically sells the Ethereum to reclaim DAI which is then burned to keep the price of DAI from falling. But assuming your margins stay safe, you're able to repay your DAI at your leisure.
2. Algorithmic: Examples: TERRAUSD, IRON. These are paired with a second, unstable cryptocurrency (TERRA/LUNA, IRON/TITAN) which is used to stabilize the coin. If the price of the stablecoin rises above $1, you mint more and distribute it in some way, diluting the coin to bring its value back to $1. If the price of the stablecoin falls below $1, you mint more of the unstable coin and use it to buy back and burn the stable coin. In case it isn't obvious: this only works if the unstable coin has value for some other reason, and in both the example cases--it ultimately didn't and both coins came unpegged when the unstable coin crashed to 0. FRAX/FXS worked this way originally I think, but ultimately they've moved to a more collateralized model.
People are rushing to do CDO-squared (collateralized debt obligation from 2006) type financial products using stable coins. And one company has already created an ETF product linked to an on-chain CDO-style debt product.
I think the financial industry has figured out a way to do an end run around all financial regulations written since the 1930s.
I think like vaccine mandates, we will all have to "relearn" why we wrote this regulations in the first place the hard way.
slower transaction processing is more profitable, because banks can profit from interest in the interim. It's not some law of nature that it can't be done faster.
>> So what are stablecoins really trying to do? Circumvent regulation? Implement something the banks just aren't willing to do themselves?
yeah and this is great.
I couldn't care less for banks protection.
Revolut blocked my account with 8k on it for 8 months, though their app said it will be max 2 weeks.
Customer support ignored me for 6 months until I said I am going to court.
So yeah fuck them. The is a case for banks but there is also a case for me keeping a chunk of my money in stable coins so its actually mine.
Edit: and to clarify I didn't do anything illegal, after I threatened them they completed their whatever they did and unlocked my funds that have been locked for 8 month.
And guess what - no consequences for them leaving me at that time without my safety net.
They are trying to give credibility to as value-less asset that’s historically been used for illegal activity, gambling, and predatory selling of said assets to people who don’t understand them.
Tether claiming they have the ability to back up their coins with USD lets crypto people claim their nonsense actually has value.
Of course the entire thing rides on the “trust me bro” guarantees offered by tether. They could erase a lot of the stink by going through an audit but for some reason they won’t.
> They could erase a lot of the stink by going through an audit but for some reason they won’t.
They're required to by the new stablecoin legislation [0] in a provision that almost looks specifically targeted at Tether. Not sure what the time frame for this is, or if there's actually any appetite to enforce the law if they dont produce a clean audit.
You are missing what many are missing, which is that a centralized stablecoin like USDC on a public blockchain is already much more useful and powerful than a dollar in a bank account, and that will only 100x from here.
The reasons why are left as an exercise to the reader :)
The US has regulated itself into a corner when it comes to AML/KYC. Those regulations ended up causing more problems than they solve, but they can't ever be undone. If something ever happens, like a terrorist attack funded by money laundering activity that the existing regulations could possibly have prevented, the blame will fall squarely on the shoulders of the politicians who decided to undo them.
It's much easier (and politically safer) to say that stablecoins are just a different asset class, and hence very different regulations should apply to them. This essentially lets politicians design a parallel, much more permissive financial regulatory system from scratch, with many lessons learned from the existing one. If something ever happens, it can always be blamed on "those pesky stablecoin issuers who keep prioritizing profits over the security of our nation."
From a purely technical perspective, any stablecoin could be replaced by a centralized database mapping public keys to balances, at much lower cost and with very little loss in functionality. That, however, would look too much like a bank from the regulatory side.
Exactly. The only way for this to deliver on its goals would be for it to not be public or permissionless. And if that's the case, then it should really just be a database and/or a shared protocol between financial institutions.
Once it's truly "open", you can't have any sensitive identifiers in there, so you need another protocol/system for correlating opaque identifiers with real-world entities (thus defeating the purpose).
And if financial institutions are involved, they'll want the ability to do what they do now: rewrite history whenever they feel the need (or are compelled by governments). Another strike against using blockchain.
To illustrate the temporal aspect: consider a traditional film projector. Between every frame, we actually see complete darkness for a short time. We could call that darkness "noise", and if we were to linger on that moment, we'd see nothing of the original signal. But since our visual systems tend to temporally average things out to a degree, we barely even notice that flicker (https://en.wikipedia.org/wiki/Flicker_fusion_threshold). I suspect noise and grain are perceived in a similar way, where they become less pronounced compared to the stable parts of the signal/image.
Astrophotographers stack noisy images to obtain images with higher SNR. I think our brains do a bit of that too, and it doesn't mean we're hallucinating detail that isn't there; the recorded noise - over time - returns to the mean, and that mean represents a clearer representation of the actual signal (though not entirely, due to systematic/non-random noise, but that's often less significant).
Denoising algorithms that operate on individual frames don't have that context, so they will lose detail (or will try to compensate by guessing). AV1 doesn't specify a specific algorithm to use, so I suppose in theory, a smart algorithm could use the temporal context to preserve some additional detail.
To the comments hating on grain: everything naturally has some amount of noise or grain - even the best digital sensors. Heck, even your eyes do. It's useful beyond just aesthetics. It tends to increase perceived sharpness and hides flaws like color banding and compression artifacts.
That's not to say that all noise and grain is good. It can be unavoidable, due to inferior technology, or a result of poor creative choices. It can even be distracting. But the alternative where everything undergoes denoising (which many of our cameras do by default now) is much worse in my opinion. To my eyes, the smoothing that happens with denoising often looks unrealistic and far more distracting.
My issue is that grain is good based on the creative decisions of the creators of the content. It is not something that a group of nerds compressing 1s and 0s should be making
I agree. However, let's look at it practically. Let's assume someone is watching content streamed on a low bandwidth connection. As a content creator, what version of the compressed content would you rather your audience experience:
a) Compressed original with significant artifacts from the codec trying to represent original grain
b) A denoised version with fewer compression artifacts, but looks "smoothed" by the denoising
c) A denoised version with synthesized grain that looks almost as good as the original, though the grain doesn't exactly match
I personally think the FGS needs better grain simulation (to look more realistic), but even in its current state, I think I'd probably go with choice C. I'm all for showing the closest thing to the author's intent. We just need to remember that compression artifacts are not the author's intent.
In an ideal world where we can deliver full, uncompressed video to everyone, then obviously - don't mess with it at all!
For content that we're concerning ourselves with this level of detail, I'd prefer the old iTunes method of prefetching the file and not stream it. For typical YT content, streaming is fine. For typical sitcom or other content, streaming is fine. For something like a feature that I'm so concerned about the details of grain, I have no problem downloading to play a local version. No, not a torrent.
We live in a world of resource constraints. The nerds compressing 1s and 0s are very much concerned about creative intent. They noticed that compression wrecks that creative intent and wanted to better communicate it in a world with bandwidth limitations.
Case in point: the HBO into animation. It uses static from the old analog days. It looks like shit even at 4k because random noise is impossible to compress without the exact strategy outlined here (stripping it out and rendering it later).
> both it and the synthesized grain image look noticeably less sharp than the source
That's true, but at a given bitrate (until you get to very high bitrates), the compressed original will usually look worse and less sharp because so many bits are spent trying to encode the original grain. As a result, that original grain tends to get "smeared" over larger areas, making it look muddy. You lose sharpness in areas of the actual scene because it's trying (and often failing) to encode sharp grains.
Film Grain Synthesis makes sense for streaming where bandwidth is limited, but I'll agree that in the examples, the synthesized grain doesn't look very grain-like. And, depending on the amount and method of denoising, it can definitely blur details from the scene.
It seems like a shame that they didn’t include a screenshot of the original (with natural grain), after suffering from low-bitrate streaming. Aka the actual baseline.
I can see why they want to compare against the actual local copy of the video with the natural grain. But that’s the perfect copy that they can’t actually hope to match.
But why do they need to emphasize it even more than the examples they gave? The "AV1 with FGS @ 2804 kbps" already looks as good or better than the "AV1 (without FGS) @ 8274 kbps", so it'll definitely look better than AV1 without FGS at an even lower bandwidth.
I think the distinction here is, they provide the "regular" stream, and the FGS stream noting that it's much smaller yet looks similar. What they don't have is a lower-bandwidth "regular" one, what 2000-or-so kbps looks like without FGS.
It's hard to boil it down to a simple thesis because the problem is complicated. He admits this in the presentation and points to it being part of the problem itself; there are so many technical details that have been met with marketing confusion and misunderstanding that it's almost impossible to adequately explain the problem in a concise way. Here's my takeaway:
- It was clearly a mistake to define HDR transfer functions using absolute luminance values. That mistake has created a cascade of additional problems
- HDR is not what it was marketed to be: it's not superior in many of the ways people think it is, and in some ways (like efficiency) it's actually worse than SDR
- The fundamental problems with HDR formats have resulted in more problems: proprietary formats like Dolby Vision attempting to patch over some of the issues (while being more closed and expensive, yet failing to fully solve the problem), consumer devices that are forced to render things worse than they might be in SDR due to the fact that it's literally impossible to implement the spec 100% (they have to make assumptions that can be very wrong), endless issues with format conversions leading to inaccurate color representation and/or color banding, and lower quality streaming at given bit rates due to HDR's reliance on higher bit depths to achieve the same tonal gradation as SDR
- Not only is this a problem for content delivery, but it's also challenging in the content creation phase as filmmakers and studios sometimes misunderstand the technology, changing their process for HDR in a way that makes the situation worse
Being somewhat of a film nerd myself and dealing with a lot of this first-hand, I completely agree with the overall sentiment and really hope it can get sorted out in the future with a more pragmatic solution that gives filmmakers the freedom to use modern displays more effectively, while not pretending that they should have control over things like the absolute brightness of a person's TV (when they have no idea what environment it might be in).
While HDR has the problems described by you, in practice, whenever possible, I choose the HDR version of a movie over its SDR version.
The reason is not HDR itself, but the fact that the HDR movies normally use the BT.2020 color space, while the SDR movies normally use the BT.709 color space.
The color spaces based on the limitations of the first color CRT tubes, which are no longer relevant today, i.e. sRGB, BT.709 and the like, are really unacceptable from my point of view, because they cannot reproduce many of the more saturated colors in the red-orange region, which are frequently encountered in nature and in manufactured objects, and which are also located in a region of the color space where human vision is most sensitive.
While no cheap monitor can reproduce the full BT.2020, many cheap monitors can reproduce the full DCI-P3 color space, which provides adequate improvements in the red-orange corner over sRGB/BT.709.
I assume you've watched the "Wider Gamut Misinformation" portion of the video. You're correct in saying that HDR normally uses Rec. 2020 (because Rec. 2100 points to Rec. 2020's color primaries), but Steve points out that Rec. 2020 is an SDR color space which doesn't technically require HDR.
It's true that, given the options available today, the two usually go hand-in-hand (wider color gamut and HDR). However, one of the arguments Steve makes is that a majority of content (and a vast majority of the pixels in that content) doesn't use colors outside Rec. 1886's gamut. Illuminated objects (natural or manmade) almost never go outside that, so you're usually only talking about a few pixels from intensely-saturated light sources in the shot (like LEDs) that might use those colors. Even then, not a lot of filmmakers feel the need to go there, so their movies will look the same in narrow and wide gamuts.
I don't think the video is arguing against wider gamut or even higher dynamic range as options; modern displays are more capable than older ones, so we need tools to allow content creators to use that capability if they desire. The problem is that all of these things (color space, bit depth, transfer function, absolute luminance values, etc) have been lumped together under one label, "HDR", and some of the implementation details are actually worse than what we had with SDR. If you skip to the "Checklist Recap" portion of the video, you'll see that there are actually quite a few downsides to HDR in its current form, but since most of the standards are tightly coupled, we're kind of stuck unless we move to something better.
I also personally choose HDR versions when watching movies, but that's because UHD content is usually also HDR. What I really want is the higher resolution. I've never felt like I'd be missing out if it didn't have HDR because I've compared the two a lot - they're really mostly the same for the movies I watch with a properly calibrated screen. To each their own :)
I disagree about "Illuminated objects (natural or manmade) almost never go outside that".
There are plenty of frequently seen purple-red-orange-yellow objects, like flowers and fruits or clothes which look very noticeably washed out when seen on an sRGB monitor in comparison with being seen on a DCI-P3 monitor, where they look pretty much like in the original (assuming adequate software configuration for managing the color spaces).
While for commercial movies I cannot verify the fidelity of the color reproduction, because I do not have access to the original images, for photographs that I am taking myself there can be no doubt that the color gamut of sRGB or Rec. BT.1886 cannot reproduce satisfactorily a lot of commonly used things.
The primary red of sRGB/Rec. BT.1886 is really a very bad red, very far from a monochromatic red, because the red phosphors of the early CRT tubes could have either good saturation or good luminosity, but not both, so they have chosen a low-saturation red that was bright enough to match the green and blue phosphors.
>> GP: I prefer the larger colorspace and to get it choose HDR, even if it's not really HDR; the reason is not HDR itself.
> P: But that larger colorspace doesn't require HDR, HDR sucks. I prefer UHD and to get it also choose HDR, even though that's not really HDR; the reason is not HDR itself.
I should have worded it like this: I prefer to watch movies in UHD, even though they're usually also HDR.
I don't think anyone is saying HDR isn't really HDR. It obviously does support higher dynamic range, but it's kind of like giving someone directions in a language they don't speak. Technically, the spec does what it claims to do, but it adds unnecessary requirements on the display side that undermine a lot of the benefit. As a result, you have filmmakers forced to pick an arbitrary level of "scene white", which in turn means that displays aren't using their full range of brightness as effectively as they could. It also means that most TVs and projectors have to implement their own version of "tone mapping", some of which are pretty terrible to be honest. Not just terrible for HDR, but worse than SDR.
Awesome to see supabase constantly improving. Been using supabase for the past few weeks and have really enjoyed it!
I was a bit surprised, however, that there's not currently a good way to reference storage objects from my postgres tables. I found that the recommended way is to store the object's path (as a string) in the database. While that works, it isn't optimal as I'd like to enforce consistency between the object and the table referencing it.
I've tried referencing the id of the corresponding row in the storage.objects table, but (1) apparently the schema supabase uses to manage storage.objects may change, and (2) it still requires separate (non-atomic) operations - or additional triggers - for keeping things in sync. Using buckets (corresponding to tables) and folders with ids is another way to work around it, but still feels suboptimal.
Not 100% sure what the best solution would look like, but ideally the supabase client could emulate storage operations for objects "attached" to a given table record, and supabase (the backend piece) could implement them as atomic operations (e.g., uploading the actual storage asset, storing the necessary metadata, and updating my table row to reference the newly-created storage object; exposing a helper function to return the URLs for any storage objects attached to a record; etc).
Anyway, just a suggestion. Keep up the great work!
this is a similar issue we face with Auth. We want to give direct access to the data/tables, and at the same time we need some flexibility to alter the tables on rare occasions.
We've dabbled with the idea of offering versioned views which have a "set" interface (eg `storage_v1`, `storage_v2`). We're still debating all the ways that we might do it.
All that to say - we're aware that this experience can be improved and we're working on it.
Does this mean there's a location in space where – on the side of the earth opposite to the sun – the sun's light is focused into a point of extremely high intensity due to the earth's atmosphere acting like a magnifying glass?
If so, that could make for either a very unfortunate surprise (i.e. a spacecraft passing through that point suddenly melting to a crisp) or an interesting source of energy if it could be harnessed.
It's not focused on a point, it's focused on an area, and while it will be hot it won't be unbelievably hot. See this explanation which is far better than I can explain- https://what-if.xkcd.com/145/
I think this what-if has serious issues in its argumentation (though I agree with the conclusion):
The argument about reversibility is kind of a straw man: it answers "why can't you concentrate all light on a single point" while the real question would be "why can't you concentrate light on a smaller surface" (which you can do actually).
Similarly for the conservation of étendue: maybe you can't "swoosh the light rays closer together" but that also doesn't say you can't concentrate beams on a small surface, which might be sufficient to start a fire.
So really it all comes down to the thermodynamic argument, which has its own problem: it only works if you assume that moonlight has the same temperature as the moon. There's nothing in the article that mentions or justifies this assumption. And obviously a mirror can reflect light that is much warmer than itself, so you definitely have to explain why that's not the case with the Moon (e.g. its albedo and heat dissipation are too low).
(However I love the drawing of the encircling sun, it's great to make the point that no matter how much light you concentrate, it won't heat the body warmer than the light's temperature).
It's a great explanation, but a "spherical chickens in a vacuum" textbook explanation. Add in realworld atmospheric effects (diffusion) and non-lens things like the internalized reflections of fiber optics and the infinite reversability of optical systems breaks down. Then look to how easy it is to start a "fire" in some substances and the moonlight-to-fire concept becomes less difficult. Greenhouse effects also throw a wrench at reversability.
If a YouTube video I saw whether you can use moonlight to start a fire is to be believed, you cannot achieve higher temperature using lens than the source temperature, so your earth lens will achieve same temperature as 5cm lens from dollar store.
At a guess, the moon is a diffuse rather than a reflective surface, so it's going to be closer to a maximum of the lunar surface temperature than to solar surface temperature.
An atmospheric lens, however, will reach a maximum of somewhat closer to solar surface temperature, though still lower because of scattering and absorption which definitely isn't trivial on this kind of scale.
If it had an albedo of 0% it would be a black body and be radiating only thermal radiation at its surface temperature; it's not too far away from that but it is reflecting some "black body" radiation from the sun representative of a higher temperature.
Maybe it's licensing? I can imagine copyright holders being squeamish about Apple processing, permanently storing, and serving heavily altered versions of their music. The difference is silly and pedantic, but by processing it in real-time during playback, one might argue it's just a filter effect like EQ.
They are DNG files, but I don't think they're truly raw like one might expect from other cameras[1]. I just downloaded the DNG posted in the article and took a look in Photoshop with all post-processing turned off. Definitely looks a bit processed in some of the background details, but I could be wrong.
Specifically, the out-of-focus shadow details look like a smoothing or denoising algorithm has been applied. Maybe it's just something about the optics Apple is using (e.g. different lenses can have distinct characteristics in bokeh, softening, color, distortion, etc) vs other dedicated cameras, but it's something I see in almost all photos coming from an iPhone.
Bitcoin (and possibly a few others) is one of the few uses of blockchain that actually makes sense. The blockchain serves the currency, and the currency serves the blockchain. The blockchain exists to provide consensus without needing to trust any off-chain entity, but the blockchain relies on computing infrastructure that has real-world costs. The scarcity of Bitcoin (the currency) and arguably-fictitious reward for participation in mining is the incentive for people in the real world to contribute resources required for the blockchain to function.
Any real-world value given to Bitcoin is secondary and only a result of the fact that (1) mining infrastructure has a cost, and (2) people who understand the system have realized that, unlike fiat, stablecoins, or 1000 other crypto products, Bitcoin has no reliance on trusted, off-chain entities who could manipulate it.
You trust your stablecoin's issuer that they hold enough fiat in reserve to match the coin? You might as well trust your bank, but while you're at it, remind them that they don't have to take days to process a transaction - they could process transactions as fast as (actually faster than) a blockchain. But I imagine most banks would point to regulation as a reason for the delays, and they might be right.
So what are stablecoins really trying to do? Circumvent regulation? Implement something the banks just aren't willing to do themselves?