Direct from the desk of Dane Williams.
Who cares whether Circle’s USDC is the best collateralised stablecoin or not.
The great battle between regulated stablecoins and algorithmic stablecoins has entered the next phase.
Circle’s cautious approach and transparency has restored a level of confidence in the stablecoin industry.
There’s no doubt that with all of the question marks surrounding Tether, Circle’s USDC has now become the darling of collateralised stablecoins.
The best collateralised stablecoin, if you will.
But the fact of the matter is… who cares?
Let’s discuss why a debate around which collateralised stablecoin is the best, is a complete and utter waste of everyone’s time.
The end goal is permissionless money
To begin with, I keep coming back to the same question of what is the end goal here?
The answer of course being the autonomous existence of permissionless money.
So if that is our end goal, then once again who cares what a regulated, collateralised stablecoin, that is really nothing more than a glorified bank is doing?
Right now, these types of stablecoins are popular, because in today’s post-UST bear market, no big player wants to trust an algorithmic solution.
Fair enough too haha.
But I want to encourage you to think about it a little deeper.
No matter what regulatory framework collateralised stablecoins work inside, they will always feature a level of third party risk.
Third party risk that can be completely cut out by a truly decentralised, algorithmic stablecoin alternative.
When a working, safe and liquid solution with zero third party risk is available, of course there is going to be huge demand for an algorithmic alternative that fits the bill.
Collateralised and algorithmic stablecoins will coexist
But before we get too deep down the decentralised rabbit hole, let’s all take a deep breath here.
Let me be clear that there will always be demand for safe, regulated banking solutions in first world countries.
Yep, including crypto on/off ramps and collateralised stablecoins.
It frustrates me to no end when I continue to see both sides of the financial industry getting hung up on thinking that their stablecoin solution is a binary proposition.
Meaning that only one parallel (algorithmic/decentralised or collateralised/regulated) will ultimately reign supreme.
It’s just not designed that way.
Again, let me say it a little louder for those in the cheap seats: Crypto is not intended to overtake the legacy financial system.
It simply exists to offer people, no matter who they are or where they’re from, an alternative.
Both systems will run parallel to one another, coexisting with whatever level of interoperability the centralised side chooses to implement.
Final thoughts on the best collateralised stablecoin
The bottom line is that the algorithmic stablecoin cat is now well and truly out of the bag.
That means no matter how much regulators may want to, there is just no stuffing it back in.
With the end goal of permissionless money for the decentralised parallel, it really doesn’t matter whether Circle’s USDC is the best collateralised stablecoin or not.
Algorithmic stablecoins like Hive Backed Dollars (HBD) are here to stay
Best of probabilities to you.
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I think coins like HBD are great and there are measures to keep prices in check. It definitely throws a wrench into the banks or government's plans because there is no central entity to pursue.
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Another point is that the tech allows Hive to peg HBD to whatever asset they please.
So just say that in the future USD is not the desired unit of account, it can easily be pegged to another asset.
Pretty cool.
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HBD over any other stablecoin anyday! After LUNA, it is the only stablecoin I trust.
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The LUNA and UST debacle has changed the game for the better.
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