Now the seller has real money and does something with it and either makes more real money or looses it.
I get my dollar back or not.
I mean don't get me wrong but even Ponzi had to work a little bit more for his thing?!
Basically, the reason is that the Government print a lot of money which result in high/hyper inflation, but then create all these obstacles for the locals to run transactions in more stable currencies (e.g. USD). The locals use Stable coins to facilitate transactions that would otherwise be very hard or impossible to perform in local currencies (e.g. buying a house).
Incorrect, Argentina has problems with currency stability because they issue debt denominated in a currency they do not issue in order to satisfy import requirements
People want to hold dollars without following KYC. Stablecoins temporarily fill this niche. (There is zero chance this is allowed to persist. But it won’t be a priority until we catch serious bad guys laundering money with stablecoins.)
Don't get me wrong, they can still be scams. The only difference is that unlike a typical ponzi, it is possible to have a sustainable and profitable business model with a stable coin.
I guess it's possible, but only within the limits of the current general interest rates. there is no magic world of safe investments returning higher interest than the safest bonds
What's weird is that crypto folks often complain about people printing money and causing inflation. But that's the whole crypto ecosystem. If something can be used as currency, it doesn't matter if the U.S. government is printing one dollar and handing it to somebody so that they can buy goods or if a crypto project is printing one NotDollar that has the same amount of worth and can be used to buy the same amount of things.
If you want to call this a Ponzi scheme, then you have to be fair and consistent and call the dollar system "the other Ponzi" scheme too (because your 1 dollar purchasing power is not the same as todays).
Which one would you rather owe you?
There's a massive difference between "we issue a token which has purchasing power because people are legally required to obtain it to pay their debts and taxes. Its purchasing power is allowed to slowly diminish over time, but it will continue to be demanded because people need it to meet obligations" and "we issue a token and lie that it's worth a dollar because it's backed by an equivalent quantity of dollars. Its purchasing power will collapse at the time we stop redeeming them for dollars, whether that's because we run out, get arrested or move on to the next grift with lots of un-redeemed dollars in our pockets"
Just assume you really don't know: you bet that 1. This has some advantage for you while the company bets it has some advantage for them. Great bet everyone wins?!
2.also with every bet the company makes with others does what to your bet?
This is the core issue.
Note that you can't go to Tether and demand your $1 back as an individual. You would have to use an exchange and hope that you can trade 1 Tether for 1 dollar on an exchange where you can cash out.
Note that the company that owns Tether also owns and exchange, which further opens the door for a lot of fraud and shenanigans as they co-mingle exchange deposits with their Tether reserves. It's possible for exchanges to run for a long time without actually having 100% of funds in reserve as long as the customers don't all withdraw their funds at the same time.
In other words: A hypothetical fraudulent stable coin could "work" for a long time, until it suddenly doesn't work at all and the value plummets.
Sounds exactly like what happened to the dollar itself, which once upon a time used to be a "stablecoin" pegged to gold.
It was pegged soundly to $35 per ounce of gold for decades. It was even ok with the one time 'repegging' from $20 to $35 in 1932 to deal with the Great Depression. But then when we finally broke the gold peg in 1971 and then all the pent up cheating broke free and the price crashed to ~$160 per ounce in only 3 years, and then all the way to $630 after 10 years.
https://www.macrotrends.net/1333/historical-gold-prices-100-...
The digital world moves fast.
If you don't believe me, keep your eye on the foreign exchanges for the next, oh, year or so. Hopefully that's a generous enough time frame, since trying to guess how long the paper mache coverings can be slapped up and held together is always very hard, but there's a lot of "pegged" currencies in the world that are not going to be pegged for much longer because they simply won't be able to be.