stable crypto currency for transactions

Please note this sub-forum does not provide professional finance advice. You should seek advice from a licensed financial advisor.

To post in this sub-forum you must have made 100 posts or have Trust status or have completed our ID Verification.

If investing please consider our affiliate link for new accounts: Sharesies.

Forums › Finance and wealth management › stable crypto currency for transactions

sudo

391 posts

Ultimate Geek

#288497 3-Jul-2021 22:20

I've avoided the hype from bitcoin/crypto currency, but I'm noticing a lot more vendors are accepting crypto currency.

Which is the most stable currency/service, that I can use for transactions and transferring crypto to others (and not speculation)?

I'm starting from scratch, so I imagine I first need to set up a wallet to get started.

1 | 2

BDFL - Memuneh
79288 posts

Uber Geek

Administrator

ID Verified

Trusted

Geekzone

Lifetime subscriber

#2738576 3-Jul-2021 22:21

If you can pay with credit card or PayPal, don't use crypto.

freitasm

BDFL - Memuneh
79288 posts

Uber Geek

Administrator

ID Verified

Trusted

Geekzone

Lifetime subscriber

#2738577 3-Jul-2021 22:23

Also... https://securityboulevard.com/2021/06/safedollar-stablecoin-not-safe-nor-stable-hack-sends-value-to-zero/

sudo

391 posts

Ultimate Geek

#2738579 3-Jul-2021 22:46

Wow that's a timely warning.

So was that supposed to be a transaction cryptocurrency?

freitasm

BDFL - Memuneh
79288 posts

Uber Geek

Administrator

ID Verified

Trusted

Geekzone

Lifetime subscriber

#2738580 3-Jul-2021 22:56

Yes.

robbyp

1199 posts

Uber Geek

#2738583 4-Jul-2021 01:05

sudo:

Wow that's a timely warning.

So was that supposed to be a transaction cryptocurrency?

From what I can see from the markets and the huge swings in crypto value ATM, it seems it be a speculative gamble at the moment fueled by greed and FOMO. I remember one Wellington company at one stage quite a few years ago was looking allowing people to pay in bitcoin. They would probably be very rich now if they had kept it in bitcoin, but I understand they were just exchanging it into dollars as soon as they were paid to try and reduce the risk of it losing value from the volatility.

BlinkyBill

1443 posts

Uber Geek
Inactive user

#2738617 4-Jul-2021 10:05

here’s a bit better article than the one Freitism referenced: https://www.blockwich.com/articles/takeaways-from-the-safedollar-stablecoin-hack

I don’t think one article on Safecoin is worth much. Safecoin’s market cap today is only $4.5m c.f. Bitcoin’s $648,092m.

El Salvador just made Bitcoin a legal tender, and it’s likely Paraguay will follow. With other USD-based currency nations to follow. We are at the beginning of a revolution; and most certainly stablecoins that are backed and pegged to a strong fiat currency would be significantly safer than algo coins. It’s important when investing to understand the purpose and mechanism of the coin you are investing in.

To answer the OP’s question here are a couple of points:

- crypto is volatile in general, so perhaps the use of the major coins as transactional currency isn’t such a good idea; and less major coins would be a bad idea.

- the whole marketplace is complex: different networks, different types of exchanges, brokers trading as exchanges, coins/safecoins/alts, different types of investments and investment strategies etc etc etc. It’s pointless making sweeping generalisations about crypto - the market overall is huge and here to stay.

- different coins are at different stages of their lifecycle: look at market cap as a key indicator of viability. Bitcoin is too big to fail, Etherium is probably the best network right now, and coins based off of ETH network have a bright future.

- but the whole thing is a risky speculation and you should only, in NZ, invest money you can avoid losing.

I’m not a financial advisor, and don’t know all that much about crypto; but I wouldn’t be using crypto coins as a transaction mechanism in NZ at the moment.

BlinkyBill

1443 posts

Uber Geek
Inactive user

#2738619 4-Jul-2021 10:12

Sorry I have conflated safecoin and safedollar. It’s easy to do and actually illustrates my point!

Sharesies

Trade NZ and US shares and funds with Sharesies (affiliate link).

freitasm

BDFL - Memuneh
79288 posts

Uber Geek

Administrator

ID Verified

Trusted

Geekzone

Lifetime subscriber

#2738628 4-Jul-2021 10:59

I am on a laptop now and will expand now. Crypto in general and Bitcoin in particular have failed to establish themselves as a currency that can be used on a daily basis. Unless you have very specific use cases, going to the supermarket and buying your milk with Bitcoin (or Stablecoin) is just not happening and I don't think it will happen. These are too volatile, the transactions take too long to be confirmed, there's a huge black market, most exchanges are exit scams.

No, don't put your money into that thinking that it will be easier. If you put your money into that you have to be prepared for loses.

BlinkyBill

1443 posts

Uber Geek
Inactive user

#2738639 4-Jul-2021 12:15

Firstly, ‘stablecoin’ is a term describing a class of cryptocurrency that is pegged to a stable fiat currency, or a stable commodity like gold. The objective of this construct is to mitigate the inherent volatility of BTC, ETH etc. Conceptually transacting on a stablecoin is equivalent to transacting against the backing fiat currency or commodity, but with the advantage that it happens on the blockchain and thus assured - as opposed to the trust model inherent with fiat currencies or commodity exchanges.

Unlike the comment above, I feel that it is a matter of time before digital currency prevails: the Chinese government is experimenting with their own digital currency (probably with the objective of tracking spend); as I posted earlier many nations currently relying on the USD to back their own fiat currencies are invented to move to digital; nations with large populations who don’t have bank accounts the same; financial institutions like JP Morgan are building their own networks; some companies are pivoting to crypto and away from their traditional businesses; there is tremendous market cap (that is, value) in BTC, ETH, BNB and whatnot, and tremendous investment in improving the network technology.

I believe the wave is growing all the time, things will improve, and in due course digital currency will become ubiquitous.

HOWEVER, it’s not there yet, mistakes will be made and people will lose money. But if you buy and hold the right stuff, you will make money. It is more vital than any other market to be informed and do careful due diligence.

2021/2022 will see quite a few significant innovations - ETH 2.0 will probably be out and that’ll fix the problems with ETH - and that’s just one example but a significant one.

I feel it’s very positive and I am taking a careful position looking at the medium to longer term. But I also don’t want to do any dough and am pretty careful not to make silly bandwagon type investments.

freitasm

BDFL - Memuneh
79288 posts

Uber Geek

Administrator

ID Verified

Trusted

Geekzone

Lifetime subscriber

#2738645 4-Jul-2021 13:20

BlinkyBill:

Firstly, ‘stablecoin’ is a term describing a class of cryptocurrency that is pegged to a stable fiat currency, or a stable commodity like gold. The objective of this construct is to mitigate the inherent volatility of BTC, ETH etc. Conceptually transacting on a stablecoin is equivalent to transacting against the backing fiat currency or commodity, but with the advantage that it happens on the blockchain and thus assured - as opposed to the trust model inherent with fiat currencies or commodity exchanges.

And yet, as per link above, just a couple of weeks ago a "stablecoin" was successfully attacked and its value, attached to the US Dollar, dropped to 0 - something it shouldn't happen.

If you are not willing to take risks, don't. That's the real advice.

BlinkyBill

1443 posts

Uber Geek
Inactive user

#2738664 4-Jul-2021 15:33

freitasm:

BlinkyBill:

Firstly, ‘stablecoin’ is a term describing a class of cryptocurrency that is pegged to a stable fiat currency, or a stable commodity like gold. The objective of this construct is to mitigate the inherent volatility of BTC, ETH etc. Conceptually transacting on a stablecoin is equivalent to transacting against the backing fiat currency or commodity, but with the advantage that it happens on the blockchain and thus assured - as opposed to the trust model inherent with fiat currencies or commodity exchanges.

And yet, as per link above, just a couple of weeks ago a "stablecoin" was successfully attacked and its value, attached to the US Dollar, dropped to 0 - something it shouldn't happen.

If you are not willing to take risks, don't. That's the real advice.

There are several kinds of stablecoins: those backed by fiat currency, or commodities like gold, and those that are algorithmic. The Stabledollar coin that was hacked was NOT backed by US currency - instead it was an algo coin, and was meant to be protected by economics and good code. Obviously hackers exploited the code, and the economics resulting plunged the value.

So in spite of its name, Stabledollar was not a stablecoin. Clearly.

Stablecoins like Tether are meant to have actual reserves of the backing commodity equal to the value of the coins on issue.

the real advice is to understand the mechanics of what you are investing in. Unfortunately Freitism doesn’t know enough about this to comment - it is fine to take a risk, knowing the risk having done some analysis. Stablecoins pegged to, for example, gold are probably safe enough if you think the code base administering them is OK, or there is a reputable escrow facility covering losses, or something otherwise protecting their value.

It is spreading FUD to take a headline or some tweets and make blanket assertions.

But without due diligence and DYOR the whole cryptocurrency market is a risky area to invest in.

BlinkyBill

1443 posts

Uber Geek
Inactive user

#2738667 4-Jul-2021 15:42

Something else occurred to me.

Say you have an NZ dollar and a NZD’s worth of bitcoin, and say that’s 1 Satoshi. You want to buy a chocolate bar for a dollar.

In a year you are likely to be able to buy 2 chocolate bars with the sitoshi, but only 1 bar with the NZD. Or 1.5 to 1. Because BTC is very likely significantly increase in value c.f. NZD. Why would you use BTC now when it is more than likely going to increase in value?

It would be much better for your personal wealth to spend the lower value currency now, and the higher value currency later.

You would need to hold the BTC or the NZD to be able to buy the chocolate bar, of course.

This concept ignores inflationary cost of a chocolate bar and transaction fees acquiring or transacting BTC. The example is intended to be illustrative.

What I’m saying is that currently cryptocurrency is better purposed to investment than it is to transaction, until it becomes much more mainstream.

freitasm

BDFL - Memuneh
79288 posts

Uber Geek

Administrator

ID Verified

Trusted

Geekzone

Lifetime subscriber

#2738706 4-Jul-2021 17:17

@BlinkyBill:

Unfortunately Freitism doesn’t know enough about this to comment - it is fine to take a risk, knowing the risk having done some analysis.

I think you are assuming things. Assumptions are never good.

Handle9

11391 posts

Uber Geek

Trusted

Lifetime subscriber

#2739410 6-Jul-2021 05:41

I'm not sure why OP wants to use crypto instead of a currency.

Crypto will probably provide some very interesting use cases for transactions but at the moment it's way too wild west and fragmented to be much use. At the moment it's primary use is gambling/speculation.

GV27

5897 posts

Uber Geek

#2739419 6-Jul-2021 06:36

ATM anything crypto-related is staring into a pond of tadpoles and trying to figure out which one will be the biggest frog.

The only time I'd use a stablecoin for anything is moving money out of one crypto and holding it in something less volatile until I could cash it out into NZD.

If you are using Binance then BUSD probably can't hurt but most pairs are in Tether and I personally would avoid it.

1 | 2