Essentially, Alphabet is launching its own blockchain for its own stablecoin. This wouldn't be a particularly interesting news if we only consider some current posts on HN about crypto's and Trump's announcement about scaling up in CRO/Crypto.com. However, it is interesting because of the text contained in the linked article: the admission that fractional reserve is madness, that makes people lose faith in fiat currencies, and faith is essentially the main underlying asset that holds them together, because States no longer have enough legitimacy in the eyes of the general population, and Hayek's idea of returning to nth private currencies competing with each other, with all the infrastructure, of course, to switch between them and the regulatory uncertainty surrounding them.
chairmansteve•5mo ago
Yeah. But I still can't buy a pizza with Bitcoin. How many years is it now?
kkfx•5mo ago
Apparently the air start to change...
jonahbenton•5mo ago
That isn't the argument- the "fractional reserve is madness" thing is a hobbyhorse of the stablecoin people but it is not the thing that makes people lose faith in fiat currencies.
What makes people lose faith in fiat currencies- the actual thing driving an enormous amount of stablecoin use right now, every day- is depreciation/inflation in those fiat currencies. (Yes, the "dollar" being the predominant unit of value in stablecoin use- that it is itself on track to be dramatically inflated away in the next several years...we can talk about that some other time).
Fiat issuers who maintain a low level of inflation enjoy very high degrees of confidence, even with a fractional reserve system, as long as there is competently managed insurance.
An "n private currencies" world reintroduces the counterparty risk on basically every transaction that was absolutely not preferable in the wildcat banking era. People want stable stores of value and no counterparty risk.
I think stablecoins are cool but they are definitely a "now you have n problems" thing for most people.
HarryHirsch•5mo ago
So the argument is: if you were paid in any stablecoin then prices of housing, coffee and cat food would not have gone up quite as much in the last five years. That does not make sense at all, the recent inflation is caused by insufficient supply.
jonahbenton•5mo ago
Stablecoins are being adopted rapidly and at large scale in emerging market jurisdictions whose currencies are depreciating more rapidly than dollars, so converting whatever into what are essentially dollars is preservation of value.
kkfx•5mo ago
chairmansteve•5mo ago
kkfx•5mo ago
jonahbenton•5mo ago
What makes people lose faith in fiat currencies- the actual thing driving an enormous amount of stablecoin use right now, every day- is depreciation/inflation in those fiat currencies. (Yes, the "dollar" being the predominant unit of value in stablecoin use- that it is itself on track to be dramatically inflated away in the next several years...we can talk about that some other time).
Fiat issuers who maintain a low level of inflation enjoy very high degrees of confidence, even with a fractional reserve system, as long as there is competently managed insurance.
An "n private currencies" world reintroduces the counterparty risk on basically every transaction that was absolutely not preferable in the wildcat banking era. People want stable stores of value and no counterparty risk.
I think stablecoins are cool but they are definitely a "now you have n problems" thing for most people.
HarryHirsch•5mo ago
jonahbenton•5mo ago