Seigniorage accrues to private entities instead of the state, enriching the owners of those private entities rather than everyone in the state that issues the currency.
That’s also a downside: When your funds can be transferred away by anyone who happens to acquire the key without triggering any fraud prevention or additional verification checks, losing your entire bank account at 4AM Sunday morning becomes much easier.
You can redeem stablecoins in blocks of a million if you are a registered bank. This is the only way to redeem them. Otherwise you can only trade them.
No, it's not. It's not possible to come to the US soldiers with a bunch of US dollars and some demands and get what's demanded in return for the dollars.
Only trust of the other market participants backs the US dollar.
Seigniorage accrues to private entities instead of the state, enriching the owners of those private entities rather than everyone in the state that issues the currency.
Faster and cheaper transactions that don't get locked up by the whims of a bureaucracy. They continue to operate on non-business days.
That’s also a downside: When your funds can be transferred away by anyone who happens to acquire the key without triggering any fraud prevention or additional verification checks, losing your entire bank account at 4AM Sunday morning becomes much easier.
This is why people who happen to own significant amount of crypto typically get hardware wallets
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Is there some magic in redeeming them? And by redeeming I mean going to issuer and getting the face value in seconds?
You can redeem stablecoins in blocks of a million if you are a registered bank. This is the only way to redeem them. Otherwise you can only trade them.
At the end of the day, for better or worse, the US dollar is backed by the US military. Virtual coins are backed by the greater fool.
What a strange toss-up.
Usdc is backed by US dollar denominated treasuries for most major issuers.
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But the stable coins are also backed by the US military. All major USD stablecoins have sanctions mechanisms baked into their smart contract.
See for yourself the blacklist features
https://github.com/circlefin/stablecoin-evm/tree/master/scri...
> US dollar is backed by the US military.
No, it's not. It's not possible to come to the US soldiers with a bunch of US dollars and some demands and get what's demanded in return for the dollars.
Only trust of the other market participants backs the US dollar.
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> Why do stablecoins exist at all?
For states:
They quietly inflate the money supply by forking fiat, achieving monetary base expansion without the political cost of explicit money creation
For issuers:
They convert user deposits into a private mint: risk-free interest on collateralized reserves, with none of the upside shared with holders
For users:
For everyone but the unbanked & criminals, stablecoins are strictly inferior money surrogate: no yield, no guarantees, and no recourse
I don’t think that matters.
It’s a sign of commitment to something they’ve invested in as OPs says.