> All stablecoins are Venmo calling themselves decentralized cryptocurrencies.
Not really.
Consider an archetypal stablecoin, like Tether or Gemini Dollars. Only liquidity providers at the edge of the payment network need to actually have a relationship with the backing company, like Tether or Gemini.
That's because payment flow is actually tracked by a public, decentralized, pseudonymous blockchain.
So an archetypal stablecoin is basically equivalent to an imaginary "benevolent PayPal" that never suspends or freezes anyone's account and doesn't charge high fees or allow clawbacks; it just works.
That's a marginal improvement over the current state of the art. Maybe just barely enough to gain traction and mass adoption.
After all, it allows reasonably fast international payments to anyone, anywhere.
If Facebook Dollars are implemented in this way, it's promising.
On the other hand, if Facebook Dollars require you to use a Facebook account to send and receive, it's just a re-implementation of venmo or PayPal.
Tether and Gemini can freeze/suspend anybody's account at any time for any reason with practically no effort if they wanted to. All they have to do is refuse to honor/reimburse anybody for the particular tokens assigned to a particular account. The public blockchain ledger makes this super easy. You can even track your blacklisted token amounts through middlemen and mixers.
The main thing to keep in mind with stablecoins is that your coins are only worth something as long as the producer (Tether/Gemini/Facebook/etc) is willing to give you actual hard currency for those coins. This gives the stablecoin "bank" total control over the system regardless of how the cryptocurrency is set up. (Similar issues do apply for private stablecoins, but the freezing/suspending will occur per an individual user trying to redeem their currency).
> Tether and Gemini can freeze/suspend anybody's account at any time for any reason with practically no effort if they wanted to.
But only liquidity providers at the edge of the payment network even need to have "accounts" with Tether or Gemini.
> You can even track your blacklisted token amounts through middlemen and mixers.
Yes, coins could be blacklisted, but it's not likely that they would be unless it came to be publicly known that they were associated with a crime.
> The main thing to keep in mind with stablecoins is that your coins are only worth something as long as the producer (Tether/Gemini/Facebook/etc) is willing to give you actual hard currency for those coins.
They don't need to give me hard currency. They just need to give somebody hard currency, and then, only if and when people actually want to redeem cash for the coins (which should be the exception, not the rule).
I don't need to have a relationship with Gemini to spend their coins (whether to get cash out or not) since I can sell the coins for about $1 to someone else who can do that.
Not really.
Consider an archetypal stablecoin, like Tether or Gemini Dollars. Only liquidity providers at the edge of the payment network need to actually have a relationship with the backing company, like Tether or Gemini.
That's because payment flow is actually tracked by a public, decentralized, pseudonymous blockchain.
So an archetypal stablecoin is basically equivalent to an imaginary "benevolent PayPal" that never suspends or freezes anyone's account and doesn't charge high fees or allow clawbacks; it just works.
That's a marginal improvement over the current state of the art. Maybe just barely enough to gain traction and mass adoption.
After all, it allows reasonably fast international payments to anyone, anywhere.
If Facebook Dollars are implemented in this way, it's promising.
On the other hand, if Facebook Dollars require you to use a Facebook account to send and receive, it's just a re-implementation of venmo or PayPal.