We have Bitcoin and it is a very good coin.
Many people are in favor of Bitcoin because it is a store of value and we can hedge inflation against it.
But many people are afraid of Bitcoin’s volatility because Bitcoin has been very volatile. For example, Bitcoin was at 69,000 USD last year in summer, at 95,000 USD last year around Christmas and is at 83,000 USD now. It is still very volatile.
To solve volatility, many people have bought so called stable coins.
A stable coin is a stable coin because it is stable - not volatile.
But when reviewing such a stable coin, we can spot many dangers.
Here is a list of important dangers but fore sure we might even find more dangers:
- stable coins might not be backed entirely / partially. In such a case it is a fraud coin because it's not backed and it can COLLAPSE
- stable coins might be operated by a fraudulent entity, where operators are not known and because of operator anonymity, operators can't be held responsible in any case of fraud / losses
- stable coins might not be regulated, resulting in a) not being backed (entirely) and / or b) being operated by a fraudulent entity
- closed source stablecoins might be fraud and we don't know it because of a lack of transparency
- stable coins are very often centralized, not decentralized like Bitcoin
- a stable coin can also collapse when it's technically flawed, like Terra Luna
Stablecoins are no solution
Stablecoins are no solution. It might be stable for some time and can work but at what cost? At a high cost!
Unbacked stablecoins should be illegal
Unbacked stablecoins should be illegal. Because why should it be allowed to provide such a crap and have no insurance?
Every distribution of stablecoins should prove a backing of such stablecoins.
Every stablecoin needs to be transparent about backing, technology and operators.
Operators need to be held accountable.
If it is a 1-Dollar stablecoin, it needs to be backed by 1 Dollar.
If it is not backed, it should not be allowed to be traded because it is huge risk for buyers in case it is getting hacked or collapsing.
For our coins to be safe, we need to avoid unbacked stable coins because of risk.