Maybe you live in a stable and developed country. Nice. Those people don't and it's extremely hard for them to open a banking account elsewhere. What they can do is save in usdt or usdc on ethereum. It's empirically much, much safer than holding dollars in a Lebanese bank.
Picture this. You're in Lebanon circa 2020. You face a guaranteed loss of 90%+ if kept in traditionally Lebanese system. Or you can self custody a usd stablecoin. Which do you choose?
> whoops now you lost 98%
Stablecoins aren’t a zero-trust system. It’s a system where you need to trust both the underlying currency and the developer.
But if I can’t trust cryptocurrencies either, I might as well use a bank.
As for me, if my US FDIC insured bank fails, I’ve got bigger problems than money.
The context was crypto. I was talking about diversifying your crypto, surely the readers here aren't as pedantically naive as to confuse diversifying crypto holdings with a fully diversified basket of different products. And of course owning different coins is diversification: owning multiple assets instead of just one is practically textbook example of increasing diversification.
Bitcoin of course being the "safest" crypto, since it's so ubiquitous, and because no one person really controls it. Not so even for Ethereum, even though it's the next best thing to "diversify" into (read: speculate on) in regards to crypto.
I think the casual reader needs to know that distinction, lest they get a nasty surprise such as—oh IDK—Bitcoin dumping 80%. Because if it does, then all the other cryptos will most likely dump 95% or more. Or worse, go to zero like the "safe bet" Luna. And so much for "diversification!"
It's like that due how all crypto coins are high risk assets that are all highly correlated to Bitcoin. And so the correct wording for buying other cryptos should never be "diversification" but speculation.
>you're just scamming them into buying something
If you want to consider me a "scammer" for thinking maybe to not put 100% of your crytpo money in UST, or whatever shitcoin was used as an example above, so be it. Y'all are the ones that mentioned specific coins, not me, I don't even understand what you think I'm selling to "scam" people on. I don't even hold any crypto to sell right now, I'm not sure what benefit I could possibly have from advocating that someone consider diversifying their holdings.
If you think holding a single crypto is more diverse than holding multiple, have at it bro.
You can minimise and swap these risks for others. It all depends on what the threat model is.
The collateral can be asset backed diversified across multiple countries and not dependent on a single currency. Some of the newer and upcoming stablecoins use asset in crypto to back themselves to reduce any dependency on country backed currency reserves.
Developers can and do burn control of the contracts once its established that they are safe and not exploitable. Of course this is a risk where you cannot make any future change but protect against risk of developers rugging you.
If you keep your cryptos in your wallet, one which you own the keys, it's a lot harder to lose your money.
Many crypto coins attempt to solve the problem of third parties confiscating your property, and first and foremost of them is Bitcoin. That's where the moniker "unconfiscatable" comes from. And let’s face it, if the guy had instead used Bitcoin, he would never have gotten into this problem (tho the value of his holdings would indeed be very volatile).
Sure, you can always act like a criminal and make threats or use torture to get it. But IMHO that's a very quaint and sad example that only serves to prove the point, because those are the lengths you have to go to in order to get it, as it's otherwise impossible to pry out of your brains. That’s why all serious "cryptobros" suggest that your highest allocation should always be Bitcoin, before you even consider any other crypto coin. Because the quainter and more experimental the alt coin is, the higher the risk of frozen accounts or worse, a coin that goes to zero such as Luna.
*unless you held your stablecoins on Anchor Protocol or a centralized entity that became insolvent
Irresponsible people losing money on ponzis is sometimes sad - but also definitely deserved.
If you hold btc and hold your keys you're fine
https://news.ycombinator.com/item?id=28300000
Edit: Not saying it's an ironclad defense of relevance to this use case, but your eyes should at least glance there first before resuming their ordinary eyeroll upon mention of crypto.