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It's like you never heard of the 2008/2009 financial crisis and how financial contagion works.

Also Coinbase is not so pristine or pure. They were misleading customers with a gentler version of the same thing Tether did. "Coinbase Vowed Token’s All-Cash Backing; That’s Not True". https://www.bloomberg.com/news/articles/2021-08-11/coinbase-...




Doesn’t matter that much whether it’s “100% backed” or whatever. The time it takes to (1) send USDC to Coinbase, (2) convert that USDC to USD, and (3) withdraw the USD to a bank account is short enough (less than a day by wire transfer) that the counterparty risk is pretty darn minimal.


Until it's not. Part 1 and 2 of your list require Coinbase's implicit consent and cooperation, and if there is a bank run on USDT, that cooperation may be in short supply.

I would bet money that Coinbase has a button on their admin panel that says "Pause redemption of USDC" or equivalent, so you're just hoping they don't push that button in extremis. I find that silly, if what we're hypothetically betting on is that the crypto system will be in extremis.




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