The Unnecessary Complications of Stable Currency in the Encryption Industry

03/09/2023 04:30 • Digital Disruptors • 121 views

According to the news on March 9, Arthur Hayes, founder of BitMEX, wrote an article to express his views on the stable currency of the encryption industry. In the article, he believed that there was no need for the super-mortgage stable currency such as MakerDAO and the algorithmic stable currency such as TerraUSD. The former was inefficient, while the latter was risky. The real reason why the market tended to store stable currency was that traders were allowed to trade between legal tender and cryptocurrency, so whether the stable currency was centralized or not was not important.

Arthur Hayes, founder of BitMEX, said that a centralized Bitcoin based stable currency NUSD should be created

Analysis based on this information:

The article written by Arthur Hayes, the founder of BitMEX, shared his thoughts about the stable currency in the encryption industry. He stated that the super-mortgage stable currency and algorithmic stable currency such as MakerDAO and TerraUSD were unnecessary and like to complicate matters. The super-mortgage stable currency was seen as inefficient, while the algorithmic stable currency was considered risky. However, the main reason why traders favored stable currency was because they were able to trade between legal tender and cryptocurrency, and the centralization of the stable currency had little impact.

Hayes’ view is based on the fact that although stable currency is an important part of the encryption industry, it has become too complicated. The creation of different stable currencies complicates their use and even abandons their primary value proposition, to reduce the volatility of cryptocurrencies. By complicating stable currency, more untested and uncertain financial instruments are created, increasing risk and reducing the reliability of the encryption industry.

The super-mortgage stable currency, for example, sets itself atop the Ethereum blockchain, making it vulnerable to fluctuations and immutability of the Ethereum blockchain. These vulnerabilities make it inefficient to use as a stable currency. On the other hand, algorithmic stable currencies like TerraUSD create a considerable amount of risk for their traders, as they rely on the stability of underlying cryptocurrencies.

However, Hayes underscores that the importance of stable currency in the encryption industry lies in the role it plays in the shift toward cryptocurrency. The ability of traders to trade between legal tender and cryptocurrency is vital, and whether the stable currency is centralized or not is of little importance. Traders value the reliability and consistency of stable currency, but the overcomplication of their creation is unnecessary.

In conclusion, Hayes argues that stable currency in the encryption industry has become overly complicated by the introduction of super-mortgage stable currency and algorithmic stable currency, which come with their respective drawbacks. However, the importance of stable currency lies in its role in trading between legal tender and cryptocurrency, and the centralization of this stable currency is unimportant. By creating more untested and uncertain financial instruments, the reliability of the encryption industry is reduced, making simpler and efficient means of stable currency necessary.

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