alt Hacker NewsSo USDT is a great amazing decentralized censorship-free drop in replacement to USD except:
- much more awkward to use
- more liable to hacks
- deposits are not insured
- fewer legal protections
- doesn’t pay interest (or not easily anyway)
- and as I find out, bannable by a central institution with lower legal oversight than the Fed
I’ll keep a mental note of this.
Replies
Suddenly, physical Gold in a safe at home looks fairly decentralized and censorship-proof
That technically true for any coin where miners are organized enough, see the ethereum fork where bad contract made wrong people lose money so they forked entire chain to get the money back
Look into the history of USDT. It's creation was dodgy to say the least.
Over time I believe it's founders did start backing it with Treasuries so now it must turn a nice profit for them.
You missed out that it is run by crooks closely associated with SBF and shady banks like Deltec
https://dailycoin.com/sbf-tether-deltec-secretly-colluding/
Also, it's not decentralised, they just unilaterally froze 2 billion in funds.
if its bannable by a centralized place please explain how it is decentral? i thought that was the kind of controls a decentral system was specifically designed against. is that understanding of mine flawed?
> bannable by a central institution with lower legal oversight than the Fed
It’s way easier to take a company to court than any government entity.
> great amazing decentralized censorship-free drop in replacement
It's not and never supposed to be and everybody who uses it in any significant amount knows that. Don't mistake a cryptotoken with a cryptocurrency.
USDT is created by a super shady company and is not at all decentralized or censorship-free. You could have made the argument for Bitcoin (and still can to a certain level) but most cryptos that propped up after that or stablecoins do not follow the hacker philosophy and more the banker one. Ironic that the whole crypto movement got co-opted by the likes of JPM which it seeked to replace.
Tether isn’t decentralized or censorship free in any way
No one ever said USDT was decentralized.
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Tether's entire business model, providing an almost-unregulated USD cryptocurrency, relies on them not arbitrarily banning people. They don't do it frequently or without thought. You're far less likely to get banned from USDT than just about any non-cryptocurrency financial institution.
I have said this many times, and will probably have to say it many more: Stablecoins are nothing but a face-saving measure for the US government.
It is politically impossible to go back on KYC/AML measures in the traditional financial system, even if some of them were perhaps a bit too ill-advised. It's much easier to say "this is shiny new tech, very different from that old tech over there; we support innovation so we won't impose KYC requirements on it", even if there's no logical reason to do that.
As it stands, stablecoins let you make a keypair in the privacy of your own home (or your own agent sandbox, as it were) and immediately start transacting. They're allowed-by-default instead of blocked-by-default, with the US government still able to block you if they have a specific reason. No traditional bank I know of, in any country, works like this. This is a valuable capability to have, technologically, even if there's no technical reason why a Postgres database and a REST API couldn't provide the same service, but faster and more easily.