What if the Mighty USD does inflate?

What would happen to the value of stablecoins pegged to USD if the USD does inflate uncontrollably? This is still a hypothetical question, but still a good question to ask at this time.

There are several kinds of stablecoins, but I won’t even consider so-called algorithmic stablecoins because these remain unproven at this time. I would like to consider here only two types of stablecoins: fiat-backed (USD-backed) and crypto-backed using a DeFi dApp.

Let’s look at the most liquid and the one with the highest market cap: USDT. What would happen to USDT…

Bravo Liquity! That's a black swan event and the protocol / algorithm performed as designed. Quite amazing. A bit like Perseverance landing in Mars - worked flawlessly.

I have been a programmer (or, more mystically, software design engineer) since the early C language days. I am old and wise, so please listen like a padwan to a master jedi.

No matter which programming paradigm you use — object oriented language and design patterns versus functional programming, or assembly language versus high-level language — one thing you need to heed is the principle of having a single physical location for every variable or object. You could be adept in several design patterns, but if you forget this principle, your skill is not worth much. …

Now that Ethereum is poised to adopt EIP-1559, it helps to rethink the original purpose of gas fees, namely that it’s solely for security. This discussion is crucial for networks that are Ethereum Virtual Machine (EVM) compatible: such as Hedera Hashgraph, Binance Smart Chain, Harmony, etc. The rationale for gas fees is security, period. It does not exist for the benefit of the Bitcoin miners, nor for that of transaction validators, much less for the benefit of network owners.

A network or blockchain with no fees is subject to denial of service attacks, which can kill a network in an…

Jack Ma climbed the economic ladder until he reached the pinnacle where he met and fought against regulators backed by political giants. He lost the battle and his company’s bid to become the largest IPO ever, but that’s not the end of the story.

The story not only has moral implications but also historical meaning. What the Chinese Communist Party (CCP) did to Jack Ma was morally reprehensible, justified only by every despot’s claim that it’s for the good of the overall system, to prevent systemic risk, for the good of the people. I predict that it has instead opened…

Your cell phone is very easy to use and yet it’s one of the most complex man-made things in the world (probably in the universe). I’d guess that less than 1% of the world population understand more than half of how the cell phone works; and yet that does not preclude the other 99% from using it effectively.

Clearly, full knowledge is not necessary in using something. Even in nature, evolution has isolated the ability to use from the ability to understand. Anything that has to be understood in order to use has been eliminated as tools. If we imagine…

In a previous article, I describe how money has value. The value of money is based on value-trust: the person accepting any form of money places trust in the value of that money and that trust is not misplaced because it is based on all the trust that other people have placed in that money before. In this article, I will deal with the question of decentralization and how private money (stablecoins) can gain value.

In any transaction, there are two sides: the spend-side and the accept-side. For any transaction to have occurred, the two sides implicitly agreed on the…

One thing that the current crop of stablecoins don’t seem to include is a strategy for mass adoption. Practically all stablecoins currently announced or already in use come with a general algorithm on how the exchange rate of each with respect to everyday goods is kept relatively constant. Tether’s USDT and MakerDAO’s DAI are popular, but only in centralized cryptocurrency exchanges. A big part of the raison d’etre of stablecoins is the use case for “medium of exchange”; in other words, being able to use stablecoins to pay for everyday stuff like groceries and a haircut. …

Truly Enlightenting Questions About Libra

Whether Libra is a debt instrument or a mutual fund share is more of a legal question, I believe, than a monetary question. In my mind, once a currency earns the trust of users, it gains network effects that create its own market. In the end, it will be priced independently of the basket of currencies that “back” it.

If money can’t buy your love, maybe Libra will do?

Backing is a tricky thing because it is only important initially, during trust network effect value establishment. When the USD gained its own worldwide network effects, removing its liability for gold did not adversely affect its…

It all starts with barter or direct exchange. If we were thrown back in time, in a situation in which there were no money, we would engage in barter. Barter does not work every time, though, and we would find that most transactions require indirect exchange: imagine Alicia who has apples and wants bananas; Brad has bananas and wants cashews; and Caitlin has cashews and wants apples. Alicia can make a deal with Caitlin to exchange some of her (Alicia’s) apples for some of Caitlin’s cashews. Alicia does not want cashews, but she needs it to make another deal, this…

Carlos Tapang

Programmer and Entrepreneur, founder and CEO of RockStable, purveyors of ROKS, the stablecoin designed for daily use, like cash.

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