A mix of “they encourage dollar-denominated liquidity in the cryptocurrency ecosystem and discourage withdrawal of the same” and “they’re good for money laundering.”
It’s underremarked upon that stablecoins accomplish basically all of the original design goals for Bitcoin qua a transactional mechanism (instant free value transfer anywhere), but that nobody cares about this because nobody ever cared about that part of the pitch.
A mix of “they encourage dollar-denominated liquidity in the cryptocurrency ecosystem and discourage withdrawal of the same” and “they’re good for money laundering.”
This was a solved problem in traditional finance, too, mostly through the extension of credit. (It doesn’t matter how long settlement takes if there is sufficient trust to enable credit.)
More from Patrick McKenzie
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There has been a lot of discussion about negative emissions technologies (NETs) lately. While we need to be skeptical of assumed planetary-scale engineering and wary of moral hazard, we also need much greater RD&D funding to keep our options open. A quick thread: 1/10
Energy system models love NETs, particularly for very rapid mitigation scenarios like 1.5C (where the alternative is zero global emissions by 2040)! More problematically, they also like tons of NETs in 2C scenarios where NETs are less essential. https://t.co/M3ACyD4cv7 2/10
In model world the math is simple: very rapid mitigation is expensive today, particularly once you get outside the power sector, and technological advancement may make later NETs cheaper than near-term mitigation after a point. 3/10
This is, of course, problematic if the aim is to ensure that particular targets (such as well-below 2C) are met; betting that a "backstop" technology that does not exist today at any meaningful scale will save the day is a hell of a moral hazard. 4/10
Many models go completely overboard with CCS, seeing a future resurgence of coal and a large part of global primary energy occurring with carbon capture. For example, here is what the MESSAGE SSP2-1.9 scenario shows: 5/10
Energy system models love NETs, particularly for very rapid mitigation scenarios like 1.5C (where the alternative is zero global emissions by 2040)! More problematically, they also like tons of NETs in 2C scenarios where NETs are less essential. https://t.co/M3ACyD4cv7 2/10
There is a lot of confusion about carbon budgets and how quickly emissions need to fall to zero to meet various warming targets. To cut through some of this morass, we can use some very simple emission pathways to explore what various targets would entail. 1/11 pic.twitter.com/Kriedtf0Ec
— Zeke Hausfather (@hausfath) September 24, 2020
In model world the math is simple: very rapid mitigation is expensive today, particularly once you get outside the power sector, and technological advancement may make later NETs cheaper than near-term mitigation after a point. 3/10
This is, of course, problematic if the aim is to ensure that particular targets (such as well-below 2C) are met; betting that a "backstop" technology that does not exist today at any meaningful scale will save the day is a hell of a moral hazard. 4/10
Many models go completely overboard with CCS, seeing a future resurgence of coal and a large part of global primary energy occurring with carbon capture. For example, here is what the MESSAGE SSP2-1.9 scenario shows: 5/10

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