Gordon's Right About Stable Coins and Everybody Else Is Wrong

Gordon's Right About Stable Coins and Everybody Else Is Wrong

By BitcoinGordon | BitcoinGordon | 13 Sep 2021


Okay, well I'm sure there's a person here and there that can be swayed.

But, I'm right, whether the future backs this up remains to be seen, because we live in a clown world with clown news, clown analysts, clown 'experts' and a big ole tent called planet earth where the circus takes place. The proof can no longer be in the pudding about important things.

So, I don't really like making predictions, whether it's news or charts, but rather don't mind showing what I do, what positions I make if that was where I currently "was" in the crypto space. I tend to have a better than 99% accuracy at things I've written to family and investors.

This is one of those "how is it that no one else can see this?" kinda things. But, the nicest smartest people in the field that I trust, mostly don't agree with me on this one either. And, I know I'm right.

So, I'm going to risk public exposure to annoying naysayers, and that's "ok" because everyone deserves the right to voice their opinion, even if I don't like it (except for that one guy that I'll probably delete if it ticks me off enough lol).

So, I'm right about stable coins. Yes, I am. Everybody else is wrong, and that's ok.

What am I right about? 

1: They Matter

2: Yes, they do too yuh huh

3: The crap about them manipulating price is bogus; that's not how this works.

4: The only reason my total crap U.S. govt. is going to come down on them (it is coming, most people don't think so, and the rest say "bring it on" and I say "forgive them, Father, for they know not what they do") is because they are efficient and they work, have done so for years, and they are interrupting the inefficiencies and dishonesty in legacy banking and investing systems.

5: FSOC is the devil.

6: Run on sentences are good for your immune system.

7: Volume matters.

8: Liquidity matters.

8.5: Jerry Mathers played the Beaver.

9: Tether, USDC, and whatever flavor of the day that fills slots 3-10 matter to the health and liquidity of every single other cryptocurrency.

So, lets break this down a little bit. I don't really feel like typing about some of the topics listed, and that's "ok". (notice a trend developing here?)

It's my blog and I'll cry if I want to. Format be darned, I do as I please- lol.

Tether, largest.

They hold value of circulation in dollars and other assets. It is up to them not to cause a fractional reserve issue. In 2017, independent sources started a craze of hysteria that there were no dollars, and no proof, that there is anything propping up the asset, so they got around to proving it. That wasn't enough. Rumor came around that their issuer was manipulating the market with Tether issuance. This never made sense, but I understand the flow of money they think was doing so. It isn't the case. Our crap government came after them to offer proof of their assets, and though they are fully regulated (yes they are, despite claims from Paxos and others), they decided to offer their books quarterly to my crap government, and they post an update of their assets daily.

There are constantly stories throwing shade at Tether's shadiness, but people are hypocrites. My goodness, not a single person on planet earth likes Tether and everyone warns to use something else. But, it remains highest volume every day for 5+ years, so someone's not cooking with canola in the kitchen...

I do not necessarily like Tether. I am not a 'Tether' man. If I had better options, I would just use native fiat. But, guess what? That isn't an option everywhere, and certainly isn't ever going to be an option anywhere that KYC/AML is required.

So, if everything from HUSD to DAI, BUSD to USDP (Paxos' new rebranding and most highly regulated coin) simply doesn't matter, just HODL and DCA and shut up already, then why do the same people that are so annoyingly pompas about how they don't care about regulation clampdowns on stables always cheering about Uniswap, Cakeswap, and all DEXs in general? Why, Batman, why? (No idea, it popped in my head. Shoulda used a crowbar).

ETH is an interesting example. For those using DEX, its mostly an all ERC-20 kinda world. Tether is an ERC-20. Bitcoin and other assets people care about in most of the freedom-loving, liquidity-neutral DEX world are wrapped to ETH and traded thus. Dare I say that most people use DAI, USDC and Tether when using DEX to trade other stuff? If there is a clamp down, the question becomes instantly whether trading pairs are halted, and musical chairs for who can get out of stables fastest and either get into another asset, or get em off exchanges DEX or CEX.

I care, and I'm being honest about it. There is no further regulation really required to keep the flow of BTC, LTC, ETH traded to/from USD. Other national tenders same story, I suppose. But, Tether especially crossed a line when it showed that instant resolution of payments could outpace traditional finance markets and impact Wall Street. That isn't going to be allowed. I have no concern about some kind of fair 'stay in your lane' rule of some kind, but I do not trust my government and their are psycho lefty 'economists' that simply do not wish to see good things continue to happen.

There is no secret this stuff has been out there doin its thang for 5, 6, 7 years. It didn't matter at all, until it started to outperform traditional money markets.

Volume matters, because it is the reality of the spot price you can get in and out of an asset. If this is threatened or disrupted, there is panic. Panic effects price. When there are major sell-offs, slippage gets real, and it can take months if not years for price to recover a range. Why? Because there isn't always new money to come in. There are quite literally hundreds of billions of dollars tied up in limit buy and sell orders on exchanges just waiting for that massive spike or flash crash dip. The smart massive whale money is not playing leverage games and shorting assets.

But, what if there are sell-offs from fear of halting stable coin trades... even a rumor of Warren's big fat indian mouth flopping off gobbledygook in the wrong direction while the wind picks it up? If lets say, Bitcoin dropped from $64K to $29,000 another time, but this time there is no stable coin activity, we would see only new buy-ins to prop the fall from fiat that was allowed on or off exchanges. What if the same crap government that caused the scare, also placed emergency measures for American customers on foreign echanges, and the flow of fiat was restricted? there would be nothing to propel the price upward movement for all of those HODLers still claiming to oh... be breathing well and not worry because Bitcoin fixes this. The truth is that there is not enough money in fiat, trackable funds, to move the market 10 billion dollars at a time. It is all doing its beautiful, wondrous thing in stables, and it works, and people like it. They love to lie and say they don't need Tether, but they use it every day and it works. Fiat is slow, clunky, and controlled to and from banks while stables are instant liquidity in and out of anything that makes sense at the time; even things that ARE manipulated.

In the current market, watching volume on Binance alone, top assets have $1-2 Billion in daily volume being traded just to USDT Tether alone. When it gets crazy, the top assets have had as much as $5B 24HRV. If there were suddenly no stable coins allowed somehow, on a massive volume market like Binance, currently under multiple U.S. agency probes and investigations, founded I have no idea, but if that volume seized, what would you sell to?

A lot of highly opinionated, what I have to assume are also highly novice traders or investors, say "who cares, I'll just sell it to 'x' coin". That tells me there is no strategy in place. There is zero purpose in trading without a strategy. Again, I know the most die-hard say buy, DCA, HODL and it doesn't matter.

Seriously, you aren't seeing the bigger picture. Even important things for nations like El Salvador, rely on L2 solutions like Lightning. Layer 1 has a limited top performance of how many transactions it can handle under the top coins. But, the daily use idea of spending on life, is going to be dependent on the day to day value of the underlying asset. There is an actual benefit, to that being something you can instantly swap into that is... STABLE!

If you want to buy and sell bread at current Bitcoin price, and there is nothing to buy and sell Bitcoin to, other than real fiat, that is something that resolves at the end of every day, 5 times/week at best. There will be stall-outs and freezes when a person can deposit and withdraw fiat, and thus this will clog the movement and internal flow of top coins to and from sources, be they wallets, L2s or on/off exchanges.

I'm not wrong about this. I'm just alone about this.

So, if you aren't getting there in understanding the domino effect, understand that stable coins and KYC/AML are directly related. More clampdown on fiat replacements means more KYC and could even mean outlawing DEX. Even more, if the flow in and out of crypto is limited to fiat, then it also means that the crap government can completely utterly manipulate the flow of your buying decisions by placing obscure, irrational, illegal and unwarranted limitations on access, flow, funding, freezes and scares to their heart's desire. If they need to control the conversation, they can cause the crisis. Climate change? No problem, look ow inefficient Bitcoin is when we starve it of volume through fiat. Ether ready to take on the SEC? No problem, we'll make it illegal to wrap anything stable, to hide assets in privacy coins, and to trade on DEX with VPN. All of this is centered around the ability to lock in a current value of a crypto asset into an instantly liquid stable price.

It will have profound problems in perception, leading to an avalanche of other unruly and unfair regulatory actions, not dissimilar to a ridiculous unchained melody of lies about the virus, for example, that give the narrative that Bitcoin was a bubble that burst, and we all need to be protected from the big bad bear of rug pulls. I don't believe it can or will ever naturally go to zero. But, governments are the only crypto killer that exist.

Now, I hear the maxi's lining up to the mic to "sock it to me" to say "I hope, I hope that bitcoin dumps. That way I can just buy more."

Yeah, I know, and I love a good bargain-barrel buy as well, but that is not the point. The true nature of the long term HODL is the belief it is life changing money, without ever really fully following the rationale as to whether you actually use or spend any of it. The true true true blue are thinking in terms of passing it down to the grandchildren, which is fiscally admirable in my view, but is far more rosy-glassed than my own perspective. I don't even trust the world not to blow up anything relatively good for humanity intraday, so if my family is going to benefit, in the future, from my good financial prowess today, it's going to be via a constant, reliable means to increase profit in exponential growth. I've developed my own system. It works. It is hard as hades and the only thing that can make it fail is not being allowed to trade to stables on foreign exchanges. That's it. That is the story.

I love crypto. I see the big picture of Bitcoin maximalism, and also believe there is space to earn from Litecoin. I am hesitant for good reason on Ether, but feel certain it gets the same regulatory pass as the others, while Bitcoin Cash is an anomaly that makes no sense but will also be allowed. XRP, dunno. Our crap government sucks.

The point I hope you may ponder, is what happens if the lack of volume in the most liquid, most consistent and best up-time aspect of the entire industry, is suddenly and without warrant, demonized, volume gone, money stuck in stables, on/off-ramps clogged into the rustic dark days of fiat folly and old school manipulation? Crypto will look weak, volume will drop, swapping between crypto only will be the massive shift, and eventually it will slow down to very small volume in comparison, focusing on USD pairs only in domestic markets and everything traded to Bitcoin on foreign exchanges. That is not optimal under any standard. What's more, there will be little purpose in shopping for a good pump on a DEX in wrapped Ether land, and we all may end up sitting back watching HEX do another 7,000,000X as the only asset that truly forced everyone to sit on their hands and earn- lol. Ironically, though I do not believe HEX a scam, I do believe it could end up as an unintentional ponzi byproxy of the actual economics underlying if it suddenly became very difficult to get in and out of assets that rely solely on DEX or ETH environments. Richard may have a good solution for that with Pulsechain as well; who knows.

So, folks, don't completely write Gordon off for having a valid perspective on the actual importance of stable coins. In my perfect world, I could trade BTC, LTC, ETH to USD all day, all night, every day, with 0 commission and big volume, using limit orders that help fuel the order book for market buys where they should focus on earning fees. I'd do it in my own country if I could. In fact I have. Truth is, the seemingly trustworthy exchanges either earn off hedges in a too-wide balance, making a hidden "zero" fee 1-4% and that isn't going to work for me. The others require 10-500 million dollars volume to get fees down, which ends up being a self-fulfilling prophecy; one needs the volume to earn the credit, but can't trade enough at the current fees to generate the volume needed to earn the reduction in fees.

Therefore, (since I used up my 'so' from above lol), the best options are high volume exchanges on foreign soil, some still not requiring KYC despite having U.S. regulatory clearance, and those do not have on-ramps for fiat at all. They use stable coins. They earn off of the volume of stable coins. They earn more than they do from trades to Bitcoin and others. They are completely oblivious, or in denial, that a sudden U.S. rug pull will effect their earnings. It will happen. It will be sudden, and there is no contingency in place. Some will panic and freeze deposit/withdrawals, while others may suspend the pairs. Still others may just KYC and cut the U.S. traders which  would suck. In fact, it all sucks. Every last bit of it.

Why does it matter? Well, the fact that this is working and I don't want them to break something that works should be enough. But, they are so corrupt and I hate the dishonesty in my crap government. I loath it. I literally hate very few things in life, but the crap government dishonesty and hypocrisy are two things I almost can't handle at this point. This kind of move will hurt businesses, DEX, CEX, trades tied into billions of dollars of positions that will get liquidated, cleared, lost, stuck, and the flow of money in crypto will be simply awful. This will chain-react to ETF's and other funds and the mainstream world will blame the bubble of crypto, when that has been perfectly fine before the agencies of crap enter in.

Do yourself a favor. Start caring about things that effect future you. This matters. It matters quite a bit. Maybe the winds of change blow in the right direction for once, and an extremely happy Gordon ends up calling one thing wrong in crypto. That will be perfect. If it never happens, or somehow Elizabeth Warren accidentally gets a single thing right for once in her demonic life, it will be glorious and I will be unimaginably suspicious. But, trust me I WANT to be wrong on the impact this will have. I am totally cool with being wrong on this one. I don't want anything bad to happen to people's earnings, to these platform businesses, to people's rights and freedoms to trade at their own risk. 

If, after reading this, you still don't get it, I am tempted to pull a Satoshi and say "I don't have time to explain it, sorry" but, I do care, I don't have time, but obviously this was on my mind. Would you rather have the power of the over-printed dollar pile back into deadly fiat where the books are resolved 1 time/day, 5 times/week, or perfectly fluid volume resolving several times per second in the trillions of dollars without a hitch for years on end? I hate the hypocrisy of a system that does fractional reserves down as low as 1-3%, where there is literally nothing backing assets in banks if everyone wanted their money all at once. If we all needed our cash right away, 1-3% of it would be available, and to maintain the status quo appearance of nothing to see here, they would immediately start a daily withdraw limit. We know it is a fact, it has happened everywhere. But meanwhile, Tether is held to a standard of 100% reserves in some asset or another, and no one is trying to over- withdraw, but if they were scared into doing so, it would show a bottleneck that is nowhere close to existing under normal conditions.

Take it as food for thought. Attack me in comments below and if I'm feeling too twitchy I'll snark back or even thank you if you're nice. If you're just one of 'those' people, you will likely get deleted because I'm at a particularly low super hero tolerance level right now cuz y'know, life.

Thank you for reading. I truly do hope it at least makes a few people think, and who knows like is often the case, maybe a few 'experts' will start acquiring Gordon's point and writing legit articles on the topic and the idea will spread, that we actually want volume, liquidity, and easy flow in and out of important assets that are making the crypto world go round.

And on that note, probably a wobbly B flat minor, Crypto Gordon Freeman, the no longer free but slightly free but always fighting for freedom super hero, for now... out.

 

How do you rate this article?


63

1

BitcoinGordon
BitcoinGordon

Hi! I'm Gordon Freeman (I hear they made a likeness of me in some video game... totally unrelated... or...).


BitcoinGordon
BitcoinGordon

Welcome! This is my blog for all things crypto, from my day trading and tutorials to general crypto news.

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.