<instructions>Your goal is to analyze the following comment and estimate how highly it will be upvoted by the Hacker News community.</instructions><comment><author>mNovak</author><text>To be clear, Tether is highly problematic, but there are other stablecoins too. While not &amp;quot;regulation&amp;quot; concerning deposits, there are so-called algoirthmic stablecoins, which are fully collateralized on-chain, meaning the coin issuer can&amp;#x27;t just go buying junk bonds or whatever.</text><parent_chain><item><author>ouid</author><text>I&amp;#x27;m confused why the comments here aren&amp;#x27;t more critical of stablecoins. A stablecoin is just a bank deposit without an interest rate, and with very little in the way of regulation over what the issuer does with the cash that has been deposited. Without some other mechanism, they wouldn&amp;#x27;t exist except as a novelty.&lt;p&gt;The question must become &amp;quot;what is the other mechanism?&amp;quot;. In the case of Tether, which has the largest market cap of any stablecoin, as far as I know, the scam is this. If I want to have liquidity on Bitfinex, I need to go buy tethers. If I try to make a transaction for bitcoins with dollars on the exchange, it could take days to process. There&amp;#x27;s no particular reason for this, You&amp;#x27;re just trading shares of a large wallet. So I must first go buy some tether from bitfinex, but wait, USD to Tether liquidity is also artifically capped. If I try to buy tether for dollars, it can also take days.&lt;p&gt;It follows that the only way to obtain liquidity on one of these exchanges is to buy and &lt;i&gt;hold&lt;/i&gt; stablecoins. This is the premise upon which the exchanges that print these currencies can then turn around and lend the dollars used to buy them.&lt;p&gt;If you discovered, suddenly, that a casino had 78 billion dollars in chips just floating around, you would rightly wonder what the hell was going on, although the explanation would likely be different.&lt;p&gt;Tether is not a cryptocurrency, it&amp;#x27;s a casino chip. An escrow account that the bank is illegally investing in risky securities, entirely for the profit of its executives, investment in which is entirely funded by manipulating access to the wider crypto market.</text></item></parent_chain></comment><story><title>Stablecoins: Growth potential and impact on banking</title><url>https://www.federalreserve.gov/econres/ifdp/stablecoins-growth-potential-and-impact-on-banking.htm</url></story>
<instructions>Your goal is to analyze the following comment and estimate how highly it will be upvoted by the Hacker News community.</instructions><comment><author>csa</author><text>&amp;gt; The question must become &amp;quot;what is the other mechanism?&amp;quot;.&lt;p&gt;For one, &lt;i&gt;in theory&lt;/i&gt;, one useful aspect of a stable coin is to allow a user to get in and out of numerous crypto currencies while minimizing fees and delays.&lt;p&gt;Any engagement with the fiat banking system will typically cost time and&amp;#x2F;or money basically due to the potential for fraud and existing anti-fraud measures both for the banks as well as the exchanges.&lt;p&gt;As such, stable coins &lt;i&gt;in theory&lt;/i&gt; should be a reasonable proxy for fiat for folks who trade crypto aggressively (e.g., day trading).&lt;p&gt;In practice, you get the train wreck that is Tether and Bitfinex. I realize that Tether is huge, but it’s not the best poster child for what a stable coin should be or can be.&lt;p&gt;I think some smart folks have realized that running solidly backed stable coin — that is, with actual currency rather than proxies like more crypto, bonds&amp;#x2F;loans, etc. — is a something worth pursuing. Perhaps for reasonable profit, perhaps for power… who knows? I think proper stable coins will become more prominent moving forward.&lt;p&gt;A second mechanism, and I think this is a big one, is that stable coins managed directly or indirectly by nation states (specifically US and China and maybe EU) will be a big deal in developing countries for both savings as well as transactions. China is already doing this on a small scale. Without getting into the nitty gritty, being a winner in this area will provide the issuer of the stable coin a tremendous amount of influence on the world economy.</text><parent_chain><item><author>ouid</author><text>I&amp;#x27;m confused why the comments here aren&amp;#x27;t more critical of stablecoins. A stablecoin is just a bank deposit without an interest rate, and with very little in the way of regulation over what the issuer does with the cash that has been deposited. Without some other mechanism, they wouldn&amp;#x27;t exist except as a novelty.&lt;p&gt;The question must become &amp;quot;what is the other mechanism?&amp;quot;. In the case of Tether, which has the largest market cap of any stablecoin, as far as I know, the scam is this. If I want to have liquidity on Bitfinex, I need to go buy tethers. If I try to make a transaction for bitcoins with dollars on the exchange, it could take days to process. There&amp;#x27;s no particular reason for this, You&amp;#x27;re just trading shares of a large wallet. So I must first go buy some tether from bitfinex, but wait, USD to Tether liquidity is also artifically capped. If I try to buy tether for dollars, it can also take days.&lt;p&gt;It follows that the only way to obtain liquidity on one of these exchanges is to buy and &lt;i&gt;hold&lt;/i&gt; stablecoins. This is the premise upon which the exchanges that print these currencies can then turn around and lend the dollars used to buy them.&lt;p&gt;If you discovered, suddenly, that a casino had 78 billion dollars in chips just floating around, you would rightly wonder what the hell was going on, although the explanation would likely be different.&lt;p&gt;Tether is not a cryptocurrency, it&amp;#x27;s a casino chip. An escrow account that the bank is illegally investing in risky securities, entirely for the profit of its executives, investment in which is entirely funded by manipulating access to the wider crypto market.</text></item></parent_chain></comment><story><title>Stablecoins: Growth potential and impact on banking</title><url>https://www.federalreserve.gov/econres/ifdp/stablecoins-growth-potential-and-impact-on-banking.htm</url></story>