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0 pointsthaumasiotes7y ago0 comments

>> I suppose the only drawback here is that they're issued from a centralized authority

> This reads in a hilarious way. Kind've like saying "I've found a perfect way to buy a car - I suppose the only drawback is that I'll actually be buying a lawn mower"

Assume bitcoins are an attempt to bring back the older technology of coins, but on the internet.

Coins are issued by a central authority, though that isn't necessarily a large part of their value. (Even when coins are made of precious metals, their standardization does increase their value somewhat over their pure value by weight.)

The problem with USDC isn't that it's issued by a central authority. That is an asset, in that it allows for a more stable value. The problem is that you can't transfer the coins without recognition from USDC. If you've got a golden dinar, you can give it to someone else no matter what the Caliph would like to say about it.

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rlucas7y ago

And, because until and unless there is a prevailing adoption of the surrogate coin in place of its pegged reserve (that is, everyone just assumes and "knows" a USDC is worth a USD), the sponsor has to stand ready to maintain the peg, that is, buy it for $1.00 no matter what.

Even the golden dinar would have the problem if it were nominally worth, say, one silver shekel, and the Caliph switched to demanding jizyah in shekels. All of a sudden, absent a massive bank keeping the 1:1 dinar:shekel peg, the dinar would drop in value and the shekels would rise relatively.

The problem is, of course, compounded when the coin becomes a slip of paper, and again when the paper becomes a mere number...

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