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Comment by getcrunk | Hacker News Reader

Interesting I didn’t know you can block/cancel transactions. Does this have to happen before the new block is minted. or it can happen after, that’s what I’m inclined to think just based off of the word block

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Centralized stablecoins like USDT and USDC aren't layer-one cryptocurrencies like Bitcoin or Ethereum. They're more like applications running on top of other blockchains, usually as smart contracts, and their issuers hold admin keys which can freeze, mint, burn, and otherwise redistribute funds at will. As far as timing goes, stablecoin issuers can't actually cancel or reverse a transaction that's already in a block that's been mined, but they can freeze the receiving address afterward and burn the funds there, then reissue them elsewhere, which has much the same effect.

That sounds interesting. How is that different from a bank? What are the advantages and disadvantages compared with a traditional bank?

If traditional banking is available to you, then I don't think that there are any significant advantages. But lots of people—notably those in countries with unstable currencies [0]—don't have access to high-quality banking, so for them, stablecoins can be an acceptable substitute in some cases. It's probably not a great idea to hold stablecoins long-term (there's always a risk of the sponsoring company going under, and unlike bonds they don't pay interest), but it should be fairly safe to use them for transfers, since the transfers are quick enough that there are very low odds of the company becoming insolvent while the transfer is underway.

[0]: https://news.ycombinator.com/item?id=50012907

It's much easier to ban or regulate cryptocurrencies than it is paper cash and brick-and-mortar banks.

> than [...] brick-and-mortar banks

How so?

Brick-and-mortar banks are much less centralized than crypto exchanges.

There’s thousands of smaller exchanges, and those are way easier to start up than banks. You don’t need a license -- in fact, you don’t even need a company.

That's absolutely untrue once you want to cash in or cash out crypto.

Okay, let me clarify: you don’t need need a license. What you need is a way to receive and send payments, which is certainly possible to regulate, but it’s also possible to navigate around those regulations.

Mostly you just a couple dozen bank / Venmo / etc accounts in different names, so when one gets blocked you don’t lose all your money. You can also open a bank card in a more lax jurisdiction and accept transfers there instead (so e.g. a user in the EU can send euros to their “friend” in Kazakhstan using Visa Direct -- good luck regulating that).

And it all exists today, on razor-thin margins somehow! I’m sure there’s a lot more shenanigans under the hood.

What if those people with unstable currencies just used a stable currency? Like certain countries just use physical USD.

> What if those people with unstable currencies just used a stable currency?

Most countries with unstable currencies either have strict currency controls, fixed exchange rates, or rampant corruption, so using USD through an established local bank is either not an option or obscenely overpriced.

> Like certain countries just use physical USD.

Yeah, that's nearly always going to be a better option than using a stablecoin, unless US currency is unavailable/illegal, or if you need to transfer money long distances (like with remittances).

But remittances are a huge industry [0] and the traditional providers charge significant markups, so stablecoins are pretty valuable for that alone.

[0]: https://en.wikipedia.org/wiki/List_of_countries_by_remittanc...

It’s completely unregulated and they can print infinite money.

Its a weird loophole or so.

You take 1 $ from someone and give them a token, now you have money the other not. In theory you need to make sure you keep the 1$ but you want to pay people and you are greedy so you invest it and suddenly everyone is broke.

That's not a loophole: that's literally the way fractional deposit traditional banking works.

The only difference is regulations -- banks have them; things labelled crypto don't (in the US).

Thats not the same. The banking system doesn't just has regulations, it also has the state behind it.

And its a second layer: fractional deposit ONTO fractional deposit.

Bear Stearns and Lehman Brothers sure thought so.

At which point they might as well use a database to keep track of the money, like banks do, and drop the cryptocurrency aspect, which was only ever a fig-leaf to keep regulators away.

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