Paxos Mistakenly Issues $300 Trillion of PayPal Stablecoin, Exceeding Global Currency Supply (x.com) 57
Paxos mistakenly minted $300 trillion of PayPal's PYUSD stablecoin on Wednesday during an internal transfer. Within minutes, the company identified the error and burned the excess tokens. The transaction appeared on Etherscan, then was quietly reversed before any funds moved or users were harmed.
Paxos said there was no security breach and customer funds were safe. The amount exceeded all US dollars in circulation and surpassed the entire cryptocurrency market combined. Stablecoin issuers possess the power to create or delete billions in synthetic dollars instantly -- a capability that distinguishes them from Bitcoin transfers, which are irreversible. Tether mistakenly minted and burned $5 billion in USDT in 2019.
Paxos said there was no security breach and customer funds were safe. The amount exceeded all US dollars in circulation and surpassed the entire cryptocurrency market combined. Stablecoin issuers possess the power to create or delete billions in synthetic dollars instantly -- a capability that distinguishes them from Bitcoin transfers, which are irreversible. Tether mistakenly minted and burned $5 billion in USDT in 2019.
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Don't forget the horse shit.
Cleaning stables is too good a job for AI (Score:2)
But you could pay the AI with cryptocurrency!
It's all a tulip scam, but there has to be a limit to this tulip fad. Probably a good idea to stock up on toilet paper for the coming barter-based economy.
Can't get more stable than the need for toilet paper.
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so why does there need to be like 6 dozen of them.
Because it's profitable, so lots of companies want a slice of the pie. For those that don't know, a stablecoin issuer takes cash and mints an equivalent amount in their stablecoin, charging a small fee for the privilege. They then invest that cash in short term treasuries, and keep the interest earned. Very simple and highly profitable, if you can capture significant market share, so without something *preventing* people from trying to launch new stablecoins
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Not really, or they wouldn't be able to just create more than there is currency and then destroy them on the same day. Stablecoins are just another form of NFT, all created by another self inserting middleman so they can take another slice of your pie.
but stable coins are about the only crypto...
And stablecoins are not crypto coins - or those 300 TRILLION coins would still be in the state of being encoded onto a blockchain ledger.
Re:"Stable" - NOT (Score:2)
OK. They *were* encoded into the ledger - and now show as burned. Those 300T were absolutely NOT tied to any assets. Say someone - oh how about George Soros - buys 100 million in this stablecoin. What's to prevent the company that owns the ledger from being pressured or *ordered* by, oh, say, the Government, to "burn" George's coins. Only his. Poof! 100M gone.
Until they are regulated as strictly as a bank - or more strictly - and have legal options to push back against something like the above - I wou
Burning money? (Score:2)
Just like a real currency.
Caveat Emptor (Score:3)
Paxos said there was no security breach and customer funds were safe.
Consider the source.
Wonderful scamcoin (Score:2)
Re:Wonderful scamcoin (Score:4, Informative)
None of them have any credibility because they are largely unregulated and not backed by guarantees against loss, so you are at the mercy of the issuer when things inevitably go wrong.
Banking License (Score:3, Insightful)
I'm pretty sure not one of these crypto companies could obtain, much less keep a banking license (at least, not in a proper country where you can't just buy your way in). They seem to be run by cowboys, and whilst they fixed their mistake quickly, it shows they don't have limits, approvals or other safeguards which, are really boring, but they've kept our banks safe for decades.
Banks aren't perfect by any means, but they understand risk. It seems the crypto bros really don't.
If a bank style audit was required, they'd all go out of business just trying to prepare for it. Any that didn't would probably fail it.
Re:Banking License (Score:4, Interesting)
Banks aren't perfect by any means, but they understand risk. It seems the crypto bros really don't.
"Go fast and break things." I think they do. They just don't care, because they believe (usually righty) that the risk is to someone else.
That this is even possible is pretty conclusive proof that the basic design of their entire system is a scam. They didn't mine $300 trillion is scam coins, they simply created it in the equivalent of typing numbers into a spreadsheet and saying "voila!"
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This is how fiat operates too, via the digital banking systems. This is why proof-of-work coins are superior to any currently known monetary system.
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> , they simply created it in the equivalent of typing numbers into a spreadsheet and saying "voila!"
This is how fiat operates too, via the digital banking systems.
But generally with considerably more oversight, and generally run by people who have actually studies economics (even if they don't really understand it), rather than pot smoking frat boys who think it's funny to rip people off.
This is why proof-of-work coins are superior to any currently known monetary system.
Other than having no actual value whatsoever, except what you con out of people below you in the pyramid, sure.
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And you would be wrong. The first stablecoin bank, backed by billionaires who backed trump, was just approved [newsweek.com] by the Office of the Comptroller of the Currency after a rigorous two month review (that's sarcasm in case you missed it).
Supposedly this "bank" will have to adhere to money laundering rules, but as we've seen with other d
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A regular bank can't magic up $1M out of thin air, much less $1T.
They can. There are laws that prevent how much they can make based on the percentage of "something-something-whatever" they put into a central banking, so there's a ceiling of sorts. But other than that, it's all magicked up, yes: Fractional-reserve banking [wikipedia.org].
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Re: Banking License (Score:2)
Have you heard about the alchemy of banking?
"Modern banking really is a kind of alchemy. Banks donâ(TM)t just lend out existing deposits â" they create new money whenever they issue a loan. The borrower spends it, it lands in another bank, and the cycle repeats. The âoegoldâ backing this process isnâ(TM)t metal, itâ(TM)s confidence: belief that loans will be repaid and deposits redeemable. Central banks stabilize the system by managing that confidence, setting interest rates, a
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>A regular bank can't magic up $1M out of thin air,
uhmm . . . historically, this is *exactly* where paper money comes from, and why they are called "banknotes"!
Banks issued paper notes promising to pay the bearer a sum of money (i.e., an amount of gold or silver) upon presentation. This was a matter of convenience, the paper being easier to haul about. This led to the practice al matter that a bank could issue more paper than it held money, as long as it was careful enough not to issue so much that too
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Banks aren't perfect by any means, but they understand risk. It seems the crypto bros really don't.
Oh! I think they understand risk quite well. I'd bet that adding all the other protections would not, at this time, increase their chance at short term success - risk of ignoring the risk is worth the reward. Crypto is still in the early days, similar to when a bank would just go belly up if robbed. To your point though, sure seems like a lot of people are getting fleeced.
Wait what? (Score:3)
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Stablecoins are not cryptocurrency. Buyer beware.
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> Stablecoins are not cryptocurrency.
"Stablecoins are a type of cryptocurrency whose value is pegged to another asset, such as a fiat currency or gold, to maintain a stable price."
https://www.coinbase.com/learn... [coinbase.com]
=Smidge=
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Though some central banks have plans to issue stablecoins of their own, which will probably be actually stable.
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Saying it does not make it so. No keys, no crypto.
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Are Bitcoin and Etherium cryptocurrencies? If so, then this is too.
There's a reason I cited Coinbase.
Saying it's not doesn't make it so.
=Smidge=
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let C = is crypto
let D = is decentralized
let F = is fiat backed
for something to be true crypto it must satisfy
C = D AND (NOT F)
because crypto by definition removes central authority and avoids fiat dependence
stablecoins by design are pegged to fiat meaning
F = TRUE
and they are centrally controlled by issuers meaning
D = FALSE
so substituting into the crypto definition we get
C = FALSE AND (NO
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Re:Wait what? (Score:4, Interesting)
For you crypto fans this is tongue-in-cheek. That's what this whole thing sounds like to me, I'm sure there's a "good" reason for stablecoin behavior...
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However, I think of it as mental masturbation. Cool concept, but not useful in the real world, and trying to solve a problem that doesn't exist. The thing is few of the cryptobros today care about the tech or the concept, it's about making a quick buck. And you better believe there are millions of people that will eat any lie they get told, in t
Yes, they were destroyed (Score:3)
They're a Layer 2 coin and ledger entries at that level are literally designed to be manipulated by the blockchain as part of the "smart contract" support.
Smart contracts are what enables the cool stuff on modern blockchains. Making "programmable money" that can be integrated with other software that hooks into the blockchain.
Layer 2 coins are not low level assets like ETH, BTC, XRP, etc. They're outputs from smart contracts that are fueled by spending the Layer 1 coin
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Burning is particularly useful as a developer working with newly created tokens (NFT or not) on chains that support such things. You end
Creating money (Score:2)
This power is typically exclusive to central banks, which are backed by the Government. It can be used to regulate inflation and create boom and bust cycles. In turn, governments have a great deal of control and influence over central banks. Having unaccountable BigTech bros access this power is beyond concerning. Why, for example, Altman or Thiel should have power to put entire economies into recession?
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This accidental creation was probably that dude misplacing a decimal point when adding to the issuer's database value entry. The 'destruction event' was just subtracting the same number from that value.
A loanshark probably has better accounting skills, even a bookie with his notebook.
See, the fact that some rando (Score:5, Interesting)
“Accidentally minted and then burned”? I thought the blockchain was sooooOOooo robust that no individual had that sort of leverage. Turns out, some individuals have infinite ability to print and then delete infinite numbers of so-called stablecoins. Stable. Uh huh.
I have noped out of that ecosystem and everything Ive read tells me that the smart move is to avoid it like the plague.
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I worry this ability will be used for nefarious purposes. "Didn't pay your fine, oh we'll just deduct that for you. You bought too much milk this week, sorry you can't. You violated the law, we'll disable your access to money for now, sorry." And so on....
Whenever we mix money and politics (ie: corporate interests) it almost never ends well for the rest of us.
So it's worse than a bookie. (Score:2)
Dibs (Score:2)
Ooops (Score:2)
Oooofff...
Minting and Rolling back (Score:2)
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Seems they have really good controls in place (Score:2)
Seriously, something like that would land people in prison with a real currency.
$712 trillion (Score:2)
If you go to BIS statistics and look up OTC derivatives, will you see that banks have created twice that in off-balance-sheet, largely unregulated, ignored by everyone assets? Why are they creating all that notional value, unless it represents private money demand (private agents say "I want $X" and banks set up notionals out of thin air that magically pay $X in interest)?
huh? (Score:1)
so they can adjust whatever whenever, this adjustment just happened to be too big to be noticed so they had to backpedal... interesting.