Bitcoin's use as a reserve asset continues to expand
51 sats \ 8 comments \ @jeff 19 Mar 2022 bitcoin
This one feels novel. And unexpected. To me.
Summary of a twitter spaces Interview with Do Kwon:
$3B USD of BTC will be purchased as a "Secondary Reserve Asset". Target is $10B worth. It will be held in a multi-sig to start, as automated tech can be prepared for it's long-run usage in the monetary policy of the UST & LUNA network.
Exact policy intent is to use the BTC to purchase UST in event of the UST peg-breaking.
Side-goals are to:
  • increase network effects of UST
  • increase trust in the peg of UST
  • increase actual durability of the peg of UST
"Bitcoin needs a stable coin partner" - Do Kwon
He announced this in advance for transparency.
Discussion Questions:
1 - Is he right? Interesting observation that every other major protocol has one and Bitcoin doesn't. Maybe it doesn't need one.
2 - This is good for bitcoin, right?
3 - Is this something you'll embrace? Does this feel like something the Bitcoin community will embrace?
PS - Hal Finney kindof called this outcome ~12 years ago. If you squint, Do Kwon runs a new-age bank.
write
preview
related posts
22 sats \ 1 reply \ @go 19 Mar 2022
"If we're going to be holding decentralized collateral, bitcoin is the only choice"
reply
10 sats \ 0 replies \ @go 19 Mar 2022
This makes me wonder if there is a Stablecoin Reserve Tracker website. Can't find one via google or DDG. Do any of you know a reserve tracker for all the Stablecoins?
reply
19 sats \ 0 replies \ @kilianbuhn 19 Mar 2022
To 3: I think we shouldn't read too much into it. Central banks hold all kinds of assets for the illusion of giving their fiat real value. Of course gold and financial instruments like bonds. But also lots of stuff - rumors are even wine and iberico jamon and stuff.
I'll be impressed if central banks and banks exchange Bitcoin reserves with each other like they exchange gold or fiat nowadays. Then we will know that they see it as a currency and not as a security/asset.
reply
30 sats \ 1 reply \ @timechain 20 Mar 2022
To 1: Heres a thought about bitcoin not really having a major stablecoin on its protocol:
I know tether got started on bitcoin's Omni. Also, i heard of the HRF issuing a bounty to make a USD peg. But, imagine if bitcoin had as much stablecoin activity on it as ETH. What would happen if there was a fork splitting bitcoin? Everyone who holds 1 btc would get 1 of the new version too. But would everone holding 1 "bit-usd" get a second version of that? The stablecoin issuer would only be able to honor one version of the "bit-usd." Therefore the stablecoin issuer, if holding a large enough amount of user value would have to make a decision that would have way too much impact on which chain gets chosen. Even if it's not in bitcoin's bests interests.
reply
0 sats \ 0 replies \ @jeff OP 20 Mar 2022
This is another anecdote that ETH is compromised and more centralized than BTC.
reply
15 sats \ 1 reply \ @TheBTCManual 20 Mar 2022
If synthetic USD via balanced LN channels becomes a reality doesn't it make all this obsolete. Personally I just see this as Do Kwon running an affinty scam to link bitcoin with his shitcoin project, the same way they doing with that stacks project by that Moneeb guy
Normies are buying on this news providing liquidity for him to dump and acquire bitcoin and provide the 52 million worth of seed capital to exit
reply
0 sats \ 0 replies \ @jeff OP 20 Mar 2022
Right, but, that's an "if", no? It doesn't exist yet (at scale). First-past-the-post can gain traction now, but lose in the long run. That's okay. Happens to lots of things.
reply
15 sats \ 0 replies \ @jp 19 Mar 2022
I expect this to accelerate across many banking institutions - especially international banks who do not benefit from Reserve Currency status (based on the latest sanctions against Russia).
Developing nation states with CBs will reduce their counterparty risk exposure through Bitcoin since USD and EU Fiat holders can still be denied access to FX markets
reply