Paxos Mistakenly Issues $300 Trillion of PayPal Stablecoin, Exceeding Global Currency Supply (x.com)
- Reference: 0179806890
- News link: https://news.slashdot.org/story/25/10/16/136237/paxos-mistakenly-issues-300-trillion-of-paypal-stablecoin-exceeding-global-currency-supply
- Source link: https://x.com/Paxos/status/1978565015943950411
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.
[1] https://x.com/Paxos/status/1978565015943950411
Burning money? (Score:2)
Just like a real currency.
Caveat Emptor (Score:2)
> Paxos said there was no security breach and customer funds were safe.
Consider the source.
Wonderful scamcoin (Score:1)
This clearly exposes the total lack of credibility of this scamcoin.
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.
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!"
Re: (Score:2)
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).
And you would be wrong. The first stablecoin bank, backed by billionaires who backed trump, [1]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
[1] https://www.newsweek.com/erebor-bank-billionaire-trump-donors-wins-approval-10887118
Re: (Score:2)
Plus this isn't bank-style behavior. A regular bank can't magic up $1M out of thin air, much less $1T. I suppose a few banks are authorized to print paper currency and could conceivably do something on a small scale, but that takes a lot more effort to pull off covertly. Being able to create currency from absolutely nothing is firmly in the domain of central bank territory, there are really only a handful of entities round the world like the Federal Reserve or Bank of England that have amassed enough trust
Wait what? (Score:2)
The coins were burned as in destroyed? If they can be burned before they are given to real people, they can be burned after they are given. I thought the whole point of cryptocurrency and blockchains is that "coins" are not centralized or centrically controlled, so that once obtained, coins are under the sole control of the holder. This doesn't sound like that.
Re: (Score:3)
It does bely that it is definitely more like trading WoW gold than it is like even trading Beanie Babies or Tulip Bulbs
Re: (Score:2)
Stablecoins are not cryptocurrency. Buyer beware.
Re: (Score:2)
> 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."
[1]https://www.coinbase.com/learn... [coinbase.com]
=Smidge=
[1] https://www.coinbase.com/learn/crypto-basics/what-is-a-stablecoin
Re: (Score:2)
The only thing that's getting pegged are the people who buy them. This incident, and the crash or loss-of-peg of other stablecoins (Luna, Terra, USDe, Tether, Titan) shows that these things are only weakly attached to the underlying currency they are supposed to be pegged to.
Though some central banks have plans to issue stablecoins of their own, which will probably be actually stable.
Re: (Score:2)
Did they also burn the 300T USD they were backed by ?
Re: (Score:2)
Well, obviously, because stablecoin is 1:1 USD ! Hooray, US debt is now non-existent. Another problem solved by technology!
Re: (Score:2)
isn't that the math Maeby used in the banana stand ?
Re:Wait what? (Score:4, Interesting)
Take the worst part of crypto (the lack of regulation / abundance of scams), the worst part of fiat money (the fact that a central entity controls it), but put on lipstick masquerading it as related to crypto (the blockchain and "true ownership"), and tada!
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...
Yes, they were destroyed (Score:3)
> The coins were burned as in destroyed?
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
Re: (Score:1)
Not an expert but I did work at a large blockchain company for a while. Many many cryptocurrencies support burning (deliberate destruction). I suspect for most (all?) of them it requires the same control you need to send some to another wallet. i.e. You have the wallet keys, you are the custodian. So if these tokens had been issued to people I doubt Paxos could burn them.
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)
Stablecoin issuers possess the power to create or delete billions in synthetic dollars instantly
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?
See, the fact that some rando (Score:5, Interesting)
at some dinky cryptobro firm, can even do this, tells me that the ecosystem is basically a private fiat currency, minus all that pesky management by an elected government, control by a politically independent central bank, and all that other useless stuff.
“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.
Re: (Score:2)
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)
Proof the numbers are made up, and more importantly the numbers are not actually backed by the dollar. We all know this but why would anyone use Stablecoin now? It's just another middleman trying to charge their middleman transaction fees.
Re: (Score:2)
Don't forget the horse shit.
Re: (Score:3)
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