state backed cryptocurrency

Is State Backed Stable Cryptocurreny The Future?

Stablecoins like Tether have proven themselves useful in the growing crypto ecosystem. It was not that many years ago that their “stability” was questioned as they have points of failure, the most obvious one being having their funds frozen instantly rendering the value down to 0.

Yet they have not only survived but they have thrived.

The difference between stablecoins vs bitcoin can be explained quite simply.

Bitcoins database is only CREATE and READ. Anyone can read and the only way to improve the database is to create new transactions secured by hash power.

Stablecoins database is a traditional CRUD where anyone can CREATE and READ but only the admins can UPDATE and DELETE.

And that’s the problem.

It is useful to compare these new stable coins to both online banking and cash.

First online banking, only you can read your own account and can create transactions. If you have a problem you can call or visit your bank (the admin) and if there is a worthy problem they as the admin can update.

What about physical cash? You can read the contents of your wallet or pile of cash and you can create transactions with no history so you are not really creating anything. If problems occur due to contract violations then there is a process but it requires courts which can then interface with banks for a resolution but this gives you confidence that after a transaction is done, its done.

What is interesting about stable coins is that (like bitcoin) it completely circumvents the need for banks in all this so the state and its courts can directly UPDATE rendering transaction beyond a certain point worthless.

They can also DELETE currency out of existence which they have to do already as cash gets old perhaps as a new monetary policy tool allowing them to get creative.

Used to think state backed stable coins were ridiculous but when you can see benefits of digitization (to the state) enhancing their power and to the users in their freedom to exchange, not to mention the massive cost saving of not printing and updating physical cash it stops looking silly and starts looking inevitable.

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