Bitcoin, not stablecoin
How the latest crypto scam reminds us why its always Bitcoin
Some of you may have heard about the “Crash of TerraUSD” as this news cycles throughout the financial world. To summarize it for you, Terra, a company based in Singapore, was selling a product known as a stablecoin in the crypto market. The stablecoin had one job, to stay pegged to the US Dollar at 1 to 1, but that peg was broken this week.
We need to know how it was pegged to understand why it broke. Traditionally, a stablecoin is backed by actual fiat currencies, bonds, treasuries, assets, or other regulated and audited financial instruments. Stablecoins are nothing new. However, this crypto experiment was a stablecoin backed by nothing, just some math formulas that tried to balance the peg against other cryptocurrencies.
The de-pegging of the stablecoin UST caused Terra to go to zero. It lost its value and credibility overnight, plunging its company token LUNA from a value of $86 per token on May 6th to $0.14 cents per token as of today, May 12th. This incident rekt a lot of people in the crypto space.
This story reminded me why I believe in Bitcoin, not crypto, not stablecoins. For me to trust a stablecoin, I would have to put trust in humans with my money. Once again, I would have inserted an intermediary between me and my money. Why would I do that?
This incident has dragged the Bitcoin price down with it, and we will not know the full effect for weeks to come. Don’t be surprised if the Bitcoin price retraces even further. So what? I never concern myself with price because I know what I am buying.
Bitcoin is the only currency that has separated humans from money. What happened with Terra can happen with any crypto company such as Ethereum, Polkadot, Cardano, Uniswap, etc., because they all have humans in control. Don’t make the same mistake others so painfully learned this week.
As for me, I see a great buying opportunity to buy the Bitcoin dip. - To the moon!
“We all knew it was going to fail eventually, we just didn’t know what the catalyst would be.”
Jim Greco - F9 Research
Will Terra Luna recover? Cryptocurrency price crash news, USD and UST meaning - and should I buy stablecoins
Things have become so dire, that many investors feel the UST project may never recover; following its crash investors raced to liquidate their positions (in both Terra and Luna) quicker than the currency’s automatic stabilizers could kick in.
Alex Nelson - National World
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