A commodity that tries to maintain a value of $1 is not a counterfeit dollar. A counterfeit dollar would be a commodity that claims it is actual USD issued by the Federal Reserve.
This is 100% an attack on crypto, which is based on autonomous validation producing permissionless access, and Grey was even running around Twitter arguing that validating an Ethereum node would become illegal if the legislation were to pass.
Yes, it's not literally a counterfeit dollar, but it effectively is. Whoever issues these tokens can make them out of thin air and may or may not have the dollars to back them up. If people treat those tokens as dollars the issuer has effectively increased the supply of dollars.
As for the nodes does this not boil down to the same issue as any other kind of prohibited transaction being done on the network. If a known criminal organization was using Ethereum would all nodes be considered to be accessories to it's crimes? Somehow I doubt that will hold water.
>If people treat those tokens as dollars the issuer has effectively increased the supply of dollars.
No, it has increased the money supply, not the dollar supply.
As long as a party is not claiming their bill is not an USD bill, or their digital token is not a Federal Reserve electronic USD, it's not counterfeiting.
People decide for themselves whether they trust the issuer's claim that the token will maintain a value of 1 USD, and there's no fraud where they are misled into believing the token is an official USD.
>Somehow I doubt that will hold water.
If legislation makes node operators liable, then it would hold water. The concern is that a principal advisor to the Democrat Congress reps who put forth the bill said the bill would have this effect.
"No, it has increased the money supply, not the dollar supply."
This is a pedantic argument at this point. Obviously it's not exactly the same thing but it is treated by people as if it was a dollar. That's the point of it.
"there's no fraud"
I didn't accuse anyone of fraud.
"If legislation makes node operators liable"
Making node operators liable for what people do with transactions those nodes handle would essentially be a ban on running crypto nodes. I don't think an outright ban like that is viable. Even if that somehow passed it nodes would probably be run anyway from other countries.
Numerous non-counterfeit forms of money increase the money supply. The money supply is far more than official USD. So you're simply mischaracterizing what counterfeiting is, and what the laws are with respect to money.
>Even if that somehow passed it nodes would probably be run anyway from other countries.
This would just be the first step. If these faux-progressive Democrats are willing to ban people from running a node on their own computer, they will be willing to criminalize any conceivable activity relating to cryptocurrency.
I think people that don't understand how any of this works will attempt to ban things that really aren't economically viable to ignore.
The attempts to ban encryption for example would make internet security essentially impossible. Obviously preventing the use of encryption was not something that could realistically be done but legislators still attempted it.
In my state a handful of legislators attempted to pass an antipornography law which would have essentially banned all electronics from sale in the state of North Dakota.
most of these things will never pass because somebody will realize how insane it is. If any of them do they will be quickly challenged because they will aside from their intended prohibitions ban a huge number of other things that weren't considered by the people that wrote the law.
I think we are well past the point where it's questionable whether or not decentralized networks for payments and probably a lot of other things are simply too useful to ignore as a technology. Any country that banned them would be putting themselves at a tremendous economic disadvantage compared to countries where they were allowed.
USDT, maybe, could count as printing money as they probably don't have the reserves. But stuff like DAI and sUSD are designed such that 1) There is no central entity controlling the network, meaning it would be impossible to regulate, and 2) Users can be sure (barring a catastrophic network failure or WBTC/USDC going under - also unlikely because the companies behind both of these stablecoins are in the US and comply with regulations) that there will always be enough assets backing the stablecoin. Things like USDT are certainly bad, but DAI and sUSD are good as there is almost no risk involved for users and there are transaprent
The decentralized ones have no reserve at all. I'm not saying it's wrong or should be banned, but everyone should have expected this. These systems are effectively taking the FEDs ability to print dollars for themselves. Obviously they weren't going to let that go on forever.
I am far from sold on the reliability of DAI and like tokens. It seems to me like they are convoluted systems that more or less boil down to it's worth a dollar because we all believe that it's worth a dollar and are assuming that everyone involved in the system will continue to believe that forever. Though the price stability of those coins wasn't in question here so I'm not sure why you were bringing it up.
To "print" DAI, you have to deposit a larger amount of crypto like ETH as collateral. If there are not enough ETH to back the DAI, liquidators are able to take the ETH and liquidate it to pay back the loan in DAI. If I want to make $100 in DAI, I have to deposit $150 in ETH. If ETH crashes and my ETH is now worth $110, liquidators can withdraw my $110, sell it for DAI, and pay back $100 DAI making everything whole again (the $10 left is kept as profit for the liquidator).
If I go to a place like BlockFi or Celsius (or another bank which accepts crypto), I can do the exact same thing. I can take out a loan with my ETH and get USD in return, and if ETH goes down, my ETH gets liquidated. No one accuses the bank of printing money when I get the loan, even though banks basically printed the USD they gave me into existence. DAI works the same as this, except there is no central company, therefore it is immune from bankruptcies.
You can verify that each DAI is backed by more than enough crypto. Go here: [https://daistats.com/#/](https://daistats.com/#/) and look at the left and right sides. Looking at the first row, you can see 427M DAI have 2.5M ETH worth $1.5B as collateral
Yes you have to back it with crypto, but the value of that crypto is not pegged to the dollar, it can go down. The blockchain doesn't know what the ETH to USD exchange rate is. It relies on people to accurately feed it that information. If for whatever reason the incentives don't align for people to do that the whole thing falls apart. This is the obvious reality of that system. The only debatable part is how one feels about that arrangement and how much confidence they have in the incentives, but I am not arguing that.
"No one accuses the bank of printing money" Wow, that is a shocking lack of awareness. Google criticism fractional reserve banking.
The fact that you can verify the value of assets held doesn't change the nature of the system.
Fair enough, oracles are a place where the system could fail. That's why oracle data is lagged by 1 hour so MKR holders can check the price to see if it makes sense. If not, the MKR governance can kick out offending oracles. The price of the MKR token would go to zero if DAI collapses, therefore token holders are strongly incentivized to keep everything running smoothly.
>"No one accuses the bank of printing money" Wow, that is a shocking lack of awareness. Google criticism fractional reserve banking.
When's the last time a bill was proposed which would make this illegal?
"When's the last time a bill was proposed which would make this illegal?"
In the UK a bill was introduced to do this in 2010.
There was a referendum on it in Switzerland in 2018.
*source: A couple seconds of googling. I have no doubt more results could be found.
There have been numerous efforts to either audit or end the Federal Reserve Banking system in the US. I don't know if any of them were writing specifically as a ban on fractional reserve policies but that was stated as a component of the issue being addressed.
Though I don't accept the presumption implied by your question. The lack of any effort by elected officials to change something doesn't mean that nobody has objected to that thing.
I guess I didn't really make my point really well.
Normal banks are allowed to lend more money than they have. This is perfectly legal and I believe they can lend 10x more money than they have. Sure, some people may object but politicians don't give a shit about that because they're all bought out by corporate interests.
DAI cannot do this because of its code. With $150 in assets, you can only "create" $100 in DAI, while a normal bank can "create" $1500 in loans. So politicians should be going after the fractional reserve system if they really think this way, but they don't because they're all bought out.
I'm not disputing the legality of fractional reserve banking. You appear to be arguing against a point that I am not making.
As for DIA. The value of assets held is not determined by code but by the oracles.
I already talked about the oracles. The price data is delayed by 1 hour to allow people to check the price beforehand and MKR holders are also incentivized to kick out misbehaving oracles as the MKR token value hinges on the success of DAI. MKR holders receive fees from DAI users but if a CDP goes under because of a misbehaving oracle, more MKR will be minted to cover the loss, decreasing the price of MKR.
Let's ignore the fractional reserve part. That was literally 1 sentence in my entire argument and it doesn't even matter at the end of the day.