HBD is one of VERY FEW unfreezable stablecoins!
You may think that stable coins stored in your own wallet (one in which you and only you have the keys for) are a secure place to park your crypto, but keep in mind that most or the largest stable coin issuers are able to freeze users assets.
Both of the major stable coin issuers: Tether/ USDT and Circle/ USDC have frozen millions of dollars worth of assets over the last couple of years.
In October Tether froze $870 000 worth of USDT linked to the funding of organisations dubbed terrorists by the U.S. and Israeli States. In November 2022 it froze $46 million worth of USDT belonging to FTX.
In June 2023 Circle froze $63 million of USDC over three addresses which had received funds following a hack of Multichain.
Why and How Are Stable Coins Frozen?
Both Tether and Circle claim to have FIAT related funds that back their stable crypto assets, this means they are required to abide by global financial regulations. This means they have to work with the financial-state nexus to block accounts which are linked to fraud or other criminal actitivies.
This means they have to maintain the capacity to block accounts that are believed to be criminal.
As to the 'why?', I'm not a technically aware coder, but the short answer is that it's in the code!.
Both Tether and Circle are able to block funds from being sent from any wallet they like. They can effectively reduce the crypto in those wallets to zero. They can't actually send that particular chunk of crypto anywhere themselves, but they can. re-issue coins of the same value to another wallet address.
Tether's FREEZING code!
Thus Tether and Circle can essentially refund a user if they send tokens to the wrong address, although they have only done this on very rare occasions.
Which stable coins aren't freezable...?
According to this Reddit three stable (or stable-ish) coins which have no capacity for freezing are:
- DAI,
- RAI, and
- LUSD
DAI, for example, is funded by independent users assets, there is no FIAT backed funds, but other mechanisms in place to maintain DAI's dollar peg... although there is apparently a lot of dependence on USDC to do this, so potentially a mass-freeze on USDC could affect the liquidity available to maintain DAI's value.
The thing about all of the above stablecoins is that they have relatively small market caps compared to the Tether and USDC behemoths.
Hive Backed Dollars (HBDs)
Here we have a truly decentralised stablecoin... within the current HardFork, it is NOT POSSIBLE to freeze anyone's HBDs. (At least I don't think it is!)
HOWEVER, it would be possible I assume to block wallet addresses on Hive with a HardFork. (I think). Remember when Hive was forked to Steem, and the HIVE removed from certain accounts on the new chain. I am sure that it would be possible to simply keep Hive as Hive in a future HF and block all assets from any one account.
TBH I'm not 100% sure it's possible to Freeze particular accounts in a HardFork, I'm working on the principle that it's possible to ANYTHING in a HF, certainly if we created a new Chain, we can make assets disappear, so I'm just working on this principle.
HOWEVER, this would require the usual consensus of 17/21 witnesses, and I think there's sufficient resistance to the idea of blocking accounts there for this not to happen, and in any case, even if it did, no one person can do this alone, you'd need several people to agree to it.
So as it stands, it's another decentralised WIN for Hive and HBDs!
Posted Using InLeo Alpha
Yup this is a little discussed aspect of HBD!
It just has so much going for it, only stable coin I hold now!
It sure does!
All the more reason HBD is the coin to stack. It's going to be something once it catches on!
I think it's gonna have a hugely positive impact on the Hive price too!
This is part of my new economics education that I’ve been seeking. Clear explanation. Sincere thanks!
It's worth keeping an eye on HBDs for sure!
Heard freezing stable coin for the first time. How can they interfere in wallets? Where is the decentralization?
I'm not sure of the technical details, but all they can do is stop the wallet from interacting with other wallets, the funds are still there. You just can't use them!
I wonder why HBD is not as known as the rest then! :(
We just need to be better or more effective ambassadors for Hive and it can change.
It's the perennial question about Hive in general - although relatively low liquidity, the only way to buy more than £10K of it easily is to buy Hive and convert it, then you're opening yourself up to the value of the Hive price!
Difficult to cash out large sums too!
It seems some coins are more centralised than they might admit. I trust the Hive witnesses. We have seen instances of accounts being robbed via phishing and it seems nobody can stop the crooks taking the funds. If the witnesses did intervene it would set a bad precedent and reduce trust as you couldn't know how safe your funds were. Governments may beg to differ on this.
I get what you mean about precedent, and I'm not sure there would be any agreement on freezing or recovering anything unless it's literally critical like it was in March 2020!
I love HBD, it's so underrated!
It is, now my only stable!
Yeah it would likely take a Hardfork - good luck getting the votes for the witnesses though!
This articles looks rad linked on Twitter :)
Cheers!
Of course this is true, we have seen in the last year how many stablecoins that were there were closed due to lack of money, but HBD, which is there, has supported people and continues to give APR. Inside the bear Market.
Funny, I was just thinking about HBD and thinking about stacking it again. Last year I was able to stack up to 1800 HBD. I like that number because it means roughly $1 in interest per day. But when Hive dropped to .25 at the end of last year I sold it all and used it to power-up. Since then I have been thinking it's a bigger advantage to power-up HP and that we can make more than the 20% by being active and involved.
At the same time, Hive isn't stable and I've started considering the advantage of having a good chunk of my holdings in something stable.
All that is to say, I think I'm going to start stacking a little HBD every week again. It's a good coin to have!
I think it's nice to have the options, if Hive ever drops to the mid 20s I may well buy some more myself, I bought a few bits and bobs down there!
But ATM I'm feeling the HBDs for sure!
In principle, crypto can be frozen on absolutely any blockchain. That includes Bitcoin, that includes Hive. It's just a matter of how many entities would be required to collude to make a freeze happen, and what incentives there are for those entities to NOT collude. It is not that it is impossible to freeze HBD, but that it would require a large conspiracy of actors who are highly disincentivized to engage in such an action.
Nicely summarised!