[HN Gopher] Tether price manipulation
___________________________________________________________________
Tether price manipulation
Author : temp
Score : 270 points
Date : 2021-01-08 11:26 UTC (11 hours ago)
(HTM) web link (twitter.com)
(TXT) w3m dump (twitter.com)
| subb wrote:
| Isn't this pretty much the same as taking a loan at a bank and
| buying bitcoins? Couldn't the "bubble" be explained by extremely
| low interest rates?
|
| Banks create money out of thin air when you take a loan. The only
| difference is they destroy that newly created money when you pay
| the loan back (but keep the interests).
|
| See : https://positivemoney.org/how-money-
| works/banking-101-video-...
| deeeeplearning wrote:
| Can someone post a real analysis? Are we supposed to believe this
| guy because he's a "Finance Major" with 5k followers and he
| posted a few graphs??
| curo wrote:
| The part I don't understand:
|
| Say the SEC takes on Tether and it falls. Why then does BTC and
| the crypto markets crash?
| gillesjacobs wrote:
| Because Tether's utility is as a legislatively advantageous on-
| and off-ramp for the whole crypto market.
|
| Off-ramp: If people want to sell BTC or other volatile tokens
| because they want to realize profits, the obvious thing would
| be to sell for fiat (USD/EUR). But due to taxation and
| legislation this is often difficult. Stablecoins like Tether
| provide the utility of a low-volatility currency that fiat
| would fill. Main advantage is bypassing legislation.
|
| This use is so common there is jargon for "Tethering up".
|
| There also exist many debit cards that allow paying with
| stablecoins, increasing utility. The rise of DeFi and money
| markets for stablecoins also provides a good return on
| stablecoins while in theory being low-volatility.
|
| On-ramp: If people want to buy a certain token they first go
| into Tether. This is usually for bypassing local legislation
| limiting the buying of a specific token or use of exchanges.
| This use is less common, I would wager.
|
| Because of this wide-spread use of Tether, it's collapse would
| cause a liquidity crisis: people want to but cannot sell their
| Tethers for other tokens/fiat. Tether goes down from it's 1USD
| peg, triggering a run on Tether as people try to swap it as
| much as they can for anything else, driving down the price
| further. Meanwhile noone is willing to buy Tether. The theory
| proposed by OP, is that panic in the already volatile crypto
| market ensues, people exit for fiat where they can driving down
| prices everywhere. Trust in the whole market will be
| obliterated.
|
| Personally, I haven't trusted Tether since the first BitFinex
| scandals and avoided like the plague. For my stablecoin needs,
| I use something that is audited and over-collateralized like
| DAIv2.
| danivaz wrote:
| Because suddenly most of the bitcoin demand would stop which
| would make the price drop
| wsc981 wrote:
| While I don't doubt that Tether was used to manipulate the
| Bitcoin price upwards, at the same time I believe Bitcoin Futures
| were/are being used to suppress the Bitcoin price as well.
|
| ------
|
| [0]: https://www.equities.com/news/how-do-bitcoin-futures-
| affect-...
| qeternity wrote:
| "Suppress" is not the right word because that would imply that
| the price is wrong. There is nothing wrong with shorting a
| market. If the short is wrong, she loses money. The market
| remains balanced and often short squeezes are responsible for
| large bull runs.
|
| Tether however isn't balanced. There is no risk. There is no
| offsetting liability in the market for the Tether they create
| (unlike with a short future, which has an offsetting long
| side).
| wsc981 wrote:
| But banks have been in the wrong in how they used futures to
| suppress prices of precious metals like gold. A quote from
| the linked article:
|
| _> Precious metals markets have long since been subject to
| manipulation by large banks. Several banks have admitted
| wrongdoing and faced fines for manipulating gold prices. Many
| believe that the prices of gold and silver have been kept
| artificially low through the use of leveraged paper
| contracts.
|
| >Dr. Paul Craig Roberts, the former economic advisor for the
| Reagan administration, has written extensively about this
| subject.
|
| >In his view, some of the biggest banks in the world have
| been working to suppress the price of gold in Western markets
| for many years. They accomplish this through creating so-
| called "naked shorts" out of thin air (the term vapor
| contract term we've been using is analogous to a naked
| short).
|
| >A naked short is simply a contract that allows an
| institution to place a sell order for a particular asset
| without having any ownership of the asset.
|
| >In other words, it allows a bank to flood the market with
| fake sell orders, creating downward market pressure. Given
| that banks can create these shorts to the moon without any
| accountability, they can keep the price down at a level more
| or less of their choosing for quite some time._
|
| Especially the last alinea seems to reflect some of the
| things you said about Tether actually.
| ausbah wrote:
| can someone explain to me how a district court can sue someone?
| shouldn't this be the SEC or something?
| memossy wrote:
| I would trust Tether more if it ever had meaningful outflows in
| dollar terms, had $1bn or so in the last crash
| (https://coinmarketcap.com/currencies/tether/) but has been
| generally on an upward march, not what you would expect from a
| stable coin
| Tepix wrote:
| I agree that USDT is fishy and it may be behind a large
| percentage of the gains in BTC and the other coins.
|
| However, there is also another possible explanation. When
| investors want to buy BTC they first to go Binance and ask for
| USDT in exchange for USD. Binance creates new USDT for them. Then
| they use the USDT to buy BTC (reverse causality). Just saying
| it's possible, but I believe Jacob Oracle to be right.
| PragmaticPulp wrote:
| > When investors want to buy BTC they first to go Binance and
| ask for USDT in exchange for USD. Binance creates new USDT for
| them. Then they use the USDT to buy BTC (reverse causality).
|
| But why sell them USDT first and then sell them BTC in exchange
| for the USDT?
|
| Why not just sell them BTC directly? That's the issue.
| triangleman wrote:
| Can binance "create new USDT" or do they need to ask Tether to
| create it for them, exchanging USD?
| aent wrote:
| And meanwhile another 600 million has just been printed by them
| today. And a few hours later bitcoin price went up. Amazing daily
| coincidences.
| Triv888 wrote:
| They just minted another 300,000,000, here are the latest whale
| mints:
|
| https://twitter.com/search?q=%22minted%20at%20Tether%20Treas...
| hoschicz wrote:
| Would we not expect this same pattern if Tether was printed in
| response to money coming in?
|
| Meaning yes, they don't have USDT 100 % fully backed, but they
| aren't printing it out of thin air either.
|
| What surprises me are the incredible volumes in USDT -- why would
| anyone ever use USDT instead of USDC, DAI or BUSD? All of them
| are much more transparent and less risky.
| ElKrist wrote:
| Sometimes it's just a practical matter
|
| The exchange I use only has instruments with USDT pairs
| (BTC/USDT, ETH/USDT), not with USDC.
| gruez wrote:
| >4) How the scam works:
|
| >Tether can print infinite amounts of (worthless) $USDT.
|
| >They then inject this into BTC, ETH, LTC, (and others) to cause
| prices to pump.
|
| >Notice how during the months they stopped printing Tether, the
| market moves sideways or drops significantly.
|
| >This graph also shows the extent to which USDT plays a role in
| Bitcoin's price action over the years.
|
| I don't get it. This doesn't really prove anything either way.
| Sure it _could_ be the case that they 're printing USDT backed by
| nothing and using it to by cryptos, but it could very well be the
| case that they're printing the USDT in response to real deposits
| from people who want to get into crypto. Since USDT accounts for
| a significant portion of the crypto market, it'd be more
| suspicious for price to go up without a corresponding large
| amount of USDT being printed, because that would mean prices are
| going up without more money being poured into the market.
| kart23 wrote:
| I dont understand how the OP knows/can prove that they are
| printing tether during the times that btc went up. Is there any
| more info on that part? It looks to me like they just drew
| lines under a graph and said tether is printing.
| jayd16 wrote:
| Yes, you're right. The point is without oversight or
| transparency we can't really know whats going on.
| Geee wrote:
| Yes, and every exchange has 'money market' which means the cash
| reserves that hold user's deposits. Most exchanges use a simple
| database to hold these balances and there's no way to audit
| them. Every exchange can 'print' money in their database if
| they want. Tether is better because it offers some transparency
| into this side of the market.
| gillesjacobs wrote:
| Exactly my issue with OP's argument.
|
| If BTC price rises, trade volume grows, increasing demand for
| stablecoins due to their utility as a low-volatile alternative
| to fiat to bypass legislation. You would EXPECT this pattern to
| arise. Note also how OP does not show a graph of trade
| volume/buy-sell volume which would potentially show that it is
| used as claimed.
|
| I still think Tether is extremely shady for refusing audits and
| dubious backing. I avoid it like the plague and hope others are
| as smart.
| suikadayo wrote:
| I've said it before and I'll say it again:
|
| It's mysterious how Bitcoiners hate the Fed printing money but
| they get awfully quiet with Tether printing money when it helps
| prop up the price.
| 0xcoffee wrote:
| Here is ThreadReaderApp link for more readable version:
|
| https://threadreaderapp.com/thread/1346133062204198917.html
| shuntress wrote:
| Can someone please explain to me how Tether is "injected" into
| Bitcoin? The entire argument seems to hinge on this but it is not
| (as far as I can see) explained.
|
| Are people accepting Tether in trade for BTC under the assumption
| that Tether will always be exchanged 1:1 for USD when this is not
| actually the case?
|
| EDIT: The answer seems to be yes Tether is 1-to-1 with "I O U $1"
| and enough people are accepting these IOUs in exchange for BTC
| that the market is moving because of this.
|
| That last part ("the market is moving because of this") seems so
| unbelievably stupid to me that I don't actually believe it.
| tim333 wrote:
| Yeah that sort of language annoys me and is often a sign the
| writer doesn't really understand what's going on. There are two
| possible phenomena:
|
| Legit: US$ are sent to tether, tethers are issued in exchange
| 1:1 and then used to buy bitcoin. This will tend to raise the
| price of bitcoin but only as long as people are sending real
| US$
|
| Illegit: tether insiders just issue tethers without US$
| backing, use them to buy bitcoin and probably try to sell the
| bitcoins at a profit becoming million/billionaires in the
| process. Sky's the limit really - you can issue crypto tokens
| in any amount though it could all collapse if people want to
| swap their tethers back to US$ and there aren't enough there.
|
| >They then inject this into BTC, ETH, LTC, (and others) to
| cause prices to pump.
|
| Means use the tether to buy BTC etc in exchange for tethers
| which will tend to raise prices if there are more buyers than
| sellers and people seeing the price rising will cause them to
| buy more.
| Traster wrote:
| The thing I don't understand about the "Illegit" method is
| that it relies on people accepting USDT for BTC and then
| _not_ cashing them out to real USD. Because if the company is
| printing USDT it wouldn 't have the cash to pay the people
| trying to cash out USDT. So to allow this to happen you would
| need a people to be holding a huge amount of USDT.
| vegannet wrote:
| You can't redeem Tether -- that's a core part of the fraud,
| they have "banking issues" and had them for years. You can
| sell it on an exchange but the Tether organisation have
| prevented any redemption of USD from USDT for years.
| Anybody turning USDT into USD is selling their USDT.
| seibelj wrote:
| Plenty of companies redeem USDT for USD. I myself worked
| at a company that redeemed billions of dollars. The FUD
| on HN is approaching delusional levels.
| miracle2k wrote:
| And what does the company do with those USDT? If the
| money printing theory is correct, companies like yours
| would be the ones counteracting any sell-pressure on
| USDT. If the theory is not correct, companies like yours
| would see an at least equal buy-side demand for USDT,
| bringing real USD into the system.
|
| I mean, does the company hold (increasingly?) large USDT
| positions on their balance sheet (and would therefore be
| the ones in the hole if Tether loses the peg), or is the
| company able to get actual dollars out of Tether inc. in
| exchange for those tokens?
| seibelj wrote:
| I worked at Circle
| https://www.theblockcrypto.com/post/48857/former-head-of-
| cir...
| xur17 wrote:
| https://tether.to/faqs/
|
| > Unfortunately, Tether has decided to stop serving U.S.
| individual and corporate customers altogether. As of
| January 1, 2018, no issuance or redeeming services will
| be available to these users. Exceptions to these
| provisions may be made by Tether, in its sole discretion,
| for entities that are: Established or organized outside
| of the United States or its territorial or insular
| possessions; and, Eligible Contract Participants pursuant
| to U.S. law.
|
| > An Eligible Contract Participant includes a corporation
| that has total assets exceeding $10,000,000 and is
| incorporated in a jurisdiction outside of the United
| States or its territories or insular possessions. This
| will be the principal basis upon which we will continue
| to do business with selected U.S. persons.
|
| Basically, it looks like they only provide on and off
| ramps for large clients outside the US. Given their
| history, I am betting they might not want to reveal where
| they store their assets, and don't want to deal with US
| regulators (but not sure this is working).
| whimsicalism wrote:
| So as source for the claim that you "can't redeem
| tether", you are linking to something that says you _can_
| redeem tether?
| cool_dude85 wrote:
| Tell you what: you give me $100, I'll give you back a
| cooldude coupon. I have sole discretion as to whether
| I'll redeem this coupon when you hand it back to me.
|
| Question: Would you say you can redeem this coupon? It's
| possible I might decide to give you back your money,
| after all.
| FabHK wrote:
| > something that says you can redeem tether
|
| Tether, in its sole discretion, may choose to redeem
| tether, as long as you're a corporation with over 10m
| USDT incorporated outside the US.
|
| I'd say that's not an ironclad guarantee that you can
| redeem tether.
| xur17 wrote:
| When did I say I was providing a source for not being
| able to redeem tether? I'm just linking to information
| that I found useful when forming an opinion on the
| matter.
| seibelj wrote:
| Yes, I worked at a company that had an entity outside the
| US that minted and redeemed tethers. This is how it
| works.
| tim333 wrote:
| Though when you sell your USDT for euro or whatever on
| Kraken say, the tether org must step in and buy to keep
| the price at US$1. So they effectively redem if not
| directly.
| gruez wrote:
| So you can't trade USDT for USD _at all_ (eg. third party
| exchange trades, or withdrawing from an USDT exchange
| directly), or is it only that you can 't trade USDT for
| USD by going through Tether Limited?
| tim333 wrote:
| People do hold USDT. I hold some myself. If you are going
| to buy crypto again it saves the hassle and expense of
| converting into fiat money and back again.
|
| The majority of exchanges can't actually hold fiat money
| due to regulatory issues.
|
| Also I imagine some people are hoping to avoid the taxman
| by keeping it in crypto though that's legally not kosher.
| rglullis wrote:
| Why USDT and not USDC or DAI? Don't you feel like holding
| USDT makes you complicit in whatever shit is going on?
|
| Also, I would be very, very weary of using an centralized
| exchange that "can not hold fiat". With the layer-2
| projects that are coming now (take a look at loopring or
| Stakenet), you can transact as much as you want, no gas
| fees and exchange fees are about the same as any CEX.
| xur17 wrote:
| Because _way_ more exchanges offer USDT trading. USDC /
| DAI are both fairly new, and aren't offered as trading
| pairs nearly as frequently.
| rglullis wrote:
| Still, they do exist _now_. And again, if an exchange
| only offers USDT as on-ramp that should be a _massive_
| signal against its trustworthiness.
| xur17 wrote:
| I somewhat agree, but it's also a chicken and the egg
| problem - everyone uses USDT as the primary pair because
| everyone wants it, and everyone wants it because that's
| what every other exchange offers. Exchanges can offer
| another stablecoin, but it's likely to have very little
| volume.
| whimsicalism wrote:
| Coinbase offers DAI, plus you can exchange DAI for any
| ERC20 token on a dex.
| xur17 wrote:
| Right, and coinbase offers USDC as well. The problem is
| the long tail of exchanges overseas that only offer USDT.
| shuntress wrote:
| In what way is Tether _not_ a fiat currency?
| tim333 wrote:
| Investopedia has:
|
| >Fiat money is a government-issued currency that isn't
| backed by a commodity such as gold.
|
| Tether fails the government-issued bit.
| shuntress wrote:
| In what _meaningful_ way is Tether not a fiat currency?
| tim333 wrote:
| The not government issued bit would become pretty
| meaningful if they get shut down or collapse. They are
| more like IOU notes for fiat currency - Tether owes you
| one US$.
| shuntress wrote:
| How is that not effectively the same thing? Is Tether
| less likely to shut down or collapse?
| blackbrokkoli wrote:
| It is meaningful, because a large part of crypto culture
| seems to be based around hand-waving and selling you an
| underdog no-big-government empower-the-people story
| notahacker wrote:
| Ironically Tether, whose quantity appears to be
| determined by however much the small private entity that
| runs it decides to create, appears to be a much purer
| example of 'fiat' currency than most national currencies
| have been for most of the last half century (quantity
| determined in a decentralised manner by the balance of
| supply and demand for credit at a base interest rate a
| centralised body periodically updates to hit a
| [decentralised market-driven] fixed target rate of
| inflation)
| Triv888 wrote:
| They can buy BTC with the newly minted coins.
| shuntress wrote:
| This makes zero sense. Why not just use USD?
|
| The entire point of Tether seems to be that it is always
| valued to be exactly 1:1 with USD. And that seems to somehow
| convince people that entities who cannot obtain a loan of USD
| _can_ obtain a loan of Tether?
| jayd16 wrote:
| It really comes down to what kind of loans Tether has
| accepted. They haven't disclosed this information.
|
| If Tether gave out a significant amount of USDT for Bitcoin
| without backing it in some other way, it means Tether isn't
| actually backed by the USD. Even if they lent out Tether
| for USD, they might have used BTC as collateral/risk
| assessment.
|
| The fear is that Thether is held up by a loan of BTC and
| BTC is held up by in some part by the stability of Tether.
| [deleted]
| nebulous1 wrote:
| Some exchanges have no traditional banking ties at all, so
| you have to send them some for of crypto in order to use
| them. It's also easier and quicker to move tether from one
| exchange to another than it is to receive a USD transfer
| and resend it to another, and that's ignoring regulatory
| issues.
| shuntress wrote:
| This does nothing to explain the purpose of Tether.
|
| If Exchange A has no "traditional banking ties" but is
| where I want to trade so I need to buy crypto through
| Exchange B first in order to trade that crypto on
| Exchange A _why_ would I buy Tether instead of BTC
| through Exchange B?
| danivaz wrote:
| Yes, if the company Thether has full control of its tokens they
| can print them and don't back them with anything (as the author
| says their reserves are not public)
| raesene9 wrote:
| Yep, AFAIK Tether is used by several exchanges that have
| problems getting direct banking relationships, as a on-ramp for
| funds.
|
| Tether originally promised that they were 1-2-1 backed with
| actual currency reserves, but had to abandon that statement
| when it became apparent they'd lost a load of money to Crypto
| Capital.
|
| Tether still claim to be 1-2-1 backed with "investments" but
| there has never been a completed 3rd party audit of that claim,
| so it literally has to be taken on trust.
| mmastrac wrote:
| Minor point, but seeing "1-2-1" in your comment is strange to
| me. I've only ever seen it as "1:1" or "1-to-1".
| jcpham2 wrote:
| Tether is the liquidity solution to the lank of United States
| Dollar withdrawal ie, a bank account.
|
| No bank, no problem! Tether on Wayne,Tether on Garth.
|
| But seriously, this old news. All of these stable coins and alt
| coins are just big pools of liquidity to swim in.
| c-fe wrote:
| So far the explanation I've come across goes as follows:
| someone creates tether. They use this tether to buy bitcoin,
| which drives up the prices of bitcoin. The more they buy, the
| more value their purchased bitcoin has. The trick seems to be
| that generating this tether should decrease the value of
| tether, however since everyone thinks its a stablecoin that is
| backed by usd 1:1, its value remains the same. The worst is
| that the purchased bitcoin increases in value, so technically
| they could sell that bitcoin for usd, then use that usd to
| temporarily back their printed tether...
|
| (This is my understanding of the situation and from the reading
| the explanations of other people, but please take this with a
| grain of salt, im not sure if everything is true)
| bootlooped wrote:
| Do most people even believe that Tether is backed 1:1? Or are
| they just playing along because it's in their interest?
| londons_explore wrote:
| All we can be sure of is that the money put into tether is
| greater or equal to the money taken out.
|
| If people didn't believe it, they would sell (either for
| BTC or real dollars), and if enough people did that then
| tether would collapse.
|
| My suspicion is there are enough dormant tether holders
| that the above will never occur, even if there have been
| some substantial fraud losses.
| alisonkisk wrote:
| There's a lot of room for delayed fraud, same as when
| banks fail.
|
| Imagine I secretly remove the contents of everyone's safe
| deposit boxes.
|
| I get rich selling what I stole, but no one is any poorer
| until much later when they try to cash out their
| treasures and realize they are gone. USDTether is an
| empty safe deposit box.
| londons_explore wrote:
| My argument is if some people aren't regularly looking in
| their safe deposit box, the fraud might _never_ cause a
| collapse.
| hannasanarion wrote:
| The New York Attorney General is going to look into the
| box on January 15.
| shuntress wrote:
| I've gathered basically this same explanation but it still
| makes no sense.
|
| Are people trading BTC for "Land for sale on the moon" too?
|
| This sounds like exchanges handing out IOUs instead of money
| when their patrons try to cash out.
| defen wrote:
| Let's say you think Bitcoin is going to crash (or you're a
| trader and just think it's going to go down). Obviously you
| want to sell your bitcoin, but also postulate that you
| don't have a connection to a real bank (KYC and all that),
| so you can't actually turn your Bitcoins into dollars. So
| you sell your Bitcoins for Tethers. Then Bitcoin goes down,
| and eventually you buy them back using Tethers.
| 40four wrote:
| It's not individuals buying Tether from Bitfinex and then
| buying Bitcoin that causes this. It is Bitfinex as an
| organization 'printing' free money and using it to pump the
| market.
| shuntress wrote:
| > _Bitfinex as an organization 'printing' free money and
| using it to pump the market._
|
| How?
| [deleted]
| c-fe wrote:
| like I mentioned above, it is speculated that they are
| the ones who are printing the tether, then use that to
| buy bitcoin. They are then probably hoping that whoever
| receives tether for selling their bitcoin does not
| immediately want usd, but instead is happy with the
| tether as it is 'backed 1:1'. (Again, I have to stress
| that this is a theory i read somewhere on the internet,
| while lots of things add up, it may also be completely
| off.)
|
| They 'pump the market' because buying bitcoin increases
| its scarcity, thus raising the price.
| alisonkisk wrote:
| But who is selling their (temporarily) valuable bitcoin
| for worthless tether instead of USD?
| FabHK wrote:
| Many exchanges eschew fiat due to regulation. So you can
| only exchange crypto for stable coin crypto there.
| gillesjacobs wrote:
| > But who is selling their (temporarily) valuable bitcoin
| for worthless tether instead of USD?
|
| You're asking what the utility of stablecoins is:
| Stablecoins are widely used as a legislatively
| advantageous on- and off-ramp for the whole crypto
| market.
|
| Off-ramp: If people want to sell BTC or other volatile
| tokens because they want to realize profits, the obvious
| thing would be to sell for fiat (USD/EUR). But due to
| taxation and legislation this is often difficult.
| Stablecoins like Tether provide the utility of a low-
| volatility currency that fiat would fill. Main advantage
| is bypassing legislation.
|
| This use is so common there is jargon for "Tethering up".
|
| There also exist many debit cards that allow paying with
| stablecoins, increasing utility. The rise of DeFi and
| money markets for stablecoins also provides a good return
| on stablecoins while in theory being low-volatility.
|
| On-ramp: If people want to buy a certain token they first
| go into Tether. This is usually for bypassing local
| legislation limiting the buying of a specific token or
| use of exchanges. This use is less common, I would wager.
|
| Of course, for any of this to be actually useful Tether
| has to remain the same price. If Tether starts to deviate
| significantly from the 1USD peg, a liquidity crisis cuold
| be triggered.
|
| Personally, I haven't trusted Tether since the first
| BitFinex scandals and avoid it like the plague. For my
| stablecoin needs, I use something that is audited and
| over-collateralized like DAIv2.
| Slikey wrote:
| This sounds incredibly illegal. I can't imagine trading
| like this is wanted by legislators and even if Tether is
| currently backed 1:1 there is no way that legislators
| will allow this to keep happening eventually crashing the
| entire Tether currency into the ground.
| gillesjacobs wrote:
| US legislators are indeed talking stablecoin restrictions
| because of this.
| PragmaticPulp wrote:
| > If people want to buy a certain token they first go
| into Tether. This is usually for bypassing local
| legislation
|
| That alone should be a red flag.
|
| I know there are a lot of narratives about people in
| repressive governments using Bitcoin to take their meager
| savings out of the country or carrying their net worth
| across borders in mind wallets, but Tether isn't
| targeting these people.
|
| Tether has very high minimum purchases. They cater
| (supposedly) to extremely wealthy clients who, for
| whatever reason, would rather use a questionable
| intermediary instead of going straight to any one of the
| major financial institutions offering BTC to purchase
| their bitcoin. If you had told me in 2015 that it was
| difficult to purchase BTC as an institution, I would have
| believed you. In 2021, there isn't much reason to do end-
| runs around regulations unless you're deliberately trying
| to launder money and/or dodge taxes.
| TearsInTheRain wrote:
| Do they even allow exchanging tether for USD? I dont
| think they do
| marcandre wrote:
| Tether does not, but you can trade USDT/USD pair on
| kraken.com
| martinko wrote:
| Nonsense. If this were the case then tether could not
| trade at par.
| [deleted]
| gruez wrote:
| I suppose this could work as long as you don't print too
| much. Let's say you have $10M USD in deposits. You can
| print $20M in USDT as long as you're reasonably sure that
| on average, people don't withdraw 50% of their deposits.
| This gets tricky though because USDT is used by multiple
| exchanges, so I'm not sure what exactly would happen if
| everyone withdraws their deposits not in USD, but in USDT
| to another exchange. They'd all need to be in on the
| conspiracy with some sort of settlement system to
| transfer money between them.
| raesene9 wrote:
| It could, if the major exchanges accept that it does and
| continue to back that notion...
| peteradio wrote:
| (narrator) tether could not trade at par
| 40four wrote:
| I'm not a finance or a crypto expert, so don't take my
| word on it. But many people way smarter than me have been
| trying to prove this hypothesis for years.
|
| Bitfinex doesn't exactly have a reputation that deserves
| any trust, so I wouldn't put it past them.
|
| I think there is a good reason Coinbase does not allow
| trading Tether.
| qeternity wrote:
| The problem is that in the early days of @Bitfinex'ed this was
| all a bit of a sideshow because there was genuinely large
| interest from retail and the outcome of crypto was far less
| certain.
|
| However three years on, crypto still does not have a "killer app"
| and is 99.99% used for speculation. Bitcoin's narrative has had
| to morph from "digital currency" to "digital gold".
|
| But in the depths of the March panic, Tether jumped the shark in
| order to backstop the entire crypto ecosystem, and they can never
| put that genie back in the bottle. Much like the Fed who cannot
| stop monetizing US deficits for fear of letting yields explode,
| the Tetheral Reserve must continue to print USDT in order to
| support prices. Exchanges cannot let this fail since the vast
| majority do not have access to the bonafide banking system and
| thus scrappy users must devise "fiat onramps".
|
| There are many theories about why, the predominant one being that
| iFinex know they are screwed, and are making one last cash grab
| before presumably disappearing. This sounds fairly reasonable if
| the entire operation is indeed a sham, but it means there is
| effectively no upper bound to BTC prices because the denominator
| in 90% of the market (USDT) is effectively zero.
|
| Tether has become too big to fail. Bitcoin now finds itself a
| high tech manifestation of the very thing that Satoshi sought to
| address.
| lukebuehler wrote:
| I've been wondering if Tether is really a scam for a long time.
|
| In all these analyses, one key point is missing: arbitrage
| traders have to make up for the sell pressure on USDT when
| Tethers are being printed and sold for BTC. Can anyone show me
| how there is a plausible mechanism/scheme/conspiracy that keeps
| the USD/USDT exchange rate stable while a crazy amount of
| illegitimate Tethers are being printed?
|
| Edit: typo and removed link.
| csomar wrote:
| It's just that conspiracy theories and doom stories are nice
| to write about. USDT market cap is lower than that of GBTC.
| So it's not possible that USDT is inflating 90% of the price
| of Bitcoin.
|
| Most people writing about USDT don't understand how arbitrage
| markets work, and don't understand that liquid markets are
| quick to resolve themselves (unlike ponzi schemes where you
| can hide the missing assets for a long time). Liquid markets
| will put quick pressure which is why these structures
| collapse faster (see MtGox)
| [deleted]
| user-the-name wrote:
| Market caps in cryptocurrencies are an entirely nonsensical
| fiction. They have no real effect on anything.
|
| Look at trade volumes. Tether is massively bigger than
| bitcoin and ethereum combined.
| Rury wrote:
| >USDT market cap is lower than that of GBTC. So it's not
| possible that USDT is inflating 90% of the price of
| Bitcoin.
|
| Technically it is possible. You don't need an equal or
| larger market cap to inflate something else 90%. You just
| need enough to dominate the trading volume. As an extreme
| example, if bid/ask volume is exactly 1 (ie the ONLY trade
| volume consists of you and 1 other person trading a
| quantity of 1), then at the minimum, all you need is a bank
| roll of 1.9x the current unit price, with both you agreeing
| to the trade it for 1.9x, for the going price per share to
| inflate 90%. And since Market Cap = Price Per Share x
| Shares Outstanding, then the market cap also inflated 90%.
| If the shares outstanding was 5000, and the unit price was
| $1, then the market cap increased $4,500 using only $1.90.
| dmichulke wrote:
| Exactly, I don't say OP is wrong but I need to see how I can
|
| 1. buy X for USD
|
| 2. buy BTC for X
|
| Shouldn't the price for X then stay the same? (Bought X once,
| sold X once)
|
| Assuming X drops to 0, wouldn't people that have BTC just use
| another coin X' to get back to USD?
|
| Assuming company Y creates X out of thin air and buys BTC
| with it, why doesn't X drop in value? Because arbitrageurs
| buy it? So arbitrageurs have lots of X? Should I care if they
| go broke in the process?
| qeternity wrote:
| Because the mechanism to transmit USDT to USD doesn't
| exist. Tether has never demonstrated a single USDT
| redemption. All of the trading on an exchange doesn't
| matter because on USDT exchanges, you never actually have
| USD. If you trade USDT/USD on Binance, your profits are
| still actually USDT denominated! There is no proven way to
| convert USDT to USD except via another crypto (i.e. Binance
| USDT -> BTC and then Coinbase BTC -> USD) hence this entire
| topic...
|
| The peg would break down if there was any real convergence
| mechanism. But there isn't. This isn't a problem until
| people actually try to exchange these supposedly fungible
| assets.
| gruez wrote:
| >Tether has never demonstrated a single USDT redemption
|
| Does that matter when you can withdraw from a USDT
| exchange and get USD in a bank account, or trade USDT for
| USD at kraken?
| csomar wrote:
| I think it's a waste of time trying to argue with the
| USDT conspiracy theory crowd. I'm not really sure what's
| their problem; they clearly never traded the market or
| used it. Maybe it's a butt-hurt feeling from missing out
| on this decade best performing assets?
|
| I'll give you a more sensible counter-argument: If you
| held USDT in the last 4 years (only) and actively
| generated yield (requires 1 hours work max per week), and
| periodically withdrew it (1-3 months) my reports show a
| 120% gain. This means if you bought $100k of USDT 4 years
| ago, you'd have withdrawn $120k into real dollars and
| still have $100k of USDT. In this situation, it's
| impossible to lose even if Tether is worth 0 tomorrow.
|
| Yield have gone considerably down. This means traders now
| trust USDT more than they did a few years ago. This would
| also mean that traders who are into risk would not hold
| USDT, they would rather hold something else to get better
| yield. If USDT was risky, its total market cap will
| decrease, as it doesn't make sense to hold into it with
| low yield. That or the market will quickly collapse.
|
| This can give you an idea (better than a stamped report
| from any AAA auditing firm) about how strong the USDT
| position in the market is.
| qeternity wrote:
| Yes - none of this proves that Tether has any reserves.
|
| It just proves that someone else believes they do...which
| we already know.
| gruez wrote:
| This is moving the goalposts. I don't think anyone thinks
| tether has full reserves. They literally admitted that
| they don't[1]. However your original claim of "you can't
| redeem USDT" is misleading at best.
|
| [1] wikipedia: "On 30 April 2019 Tether Limited's lawyer
| claimed that each tether was backed by only $0.74 in cash
| and cash equivalents"
| nebulous1 wrote:
| I feel like most people think of what you're referring to
| as trading Tether, and "redeeming USDT" as actually
| exchanging the USDT for the fiat that is supposedly
| backing it.
|
| Everybody realizes that for the individual turning tether
| into fiat both of these amount to the same thing, but
| they are not the same thing for the system as a whole at
| all. Ultimately the only way that tether as a company can
| maintain the peg is by buying their own token with the
| reserve funds if market won't (there are obviously
| different mechanisms they could use to do this, either
| via the exchanges or with the seller directly trading
| with them). If they don't have access to enough reserve
| funds then the peg will eventually fail.
| FireBeyond wrote:
| That was after how many years of Tether insisting that
| they had 1:1 reserves, talking about audits thereof,
| threatening lawsuits against people who said they didn't?
|
| ... and many many crypto-fans naysaying anyone who didn't
| believe them.
| Uberphallus wrote:
| Since they can print X and they peg it to USD, it won't
| change in price itself, but nothing can assure the driving
| force of BTC price is actual demand.
| dmichulke wrote:
| When central banks peg their currencies to others, that
| means they buy the foreign currency if their own currency
| is overvalued in comparison, or sell foreign currency to
| buy local curerncy in the case of undervaluation.
|
| You say that a peg breaks if the Central Bank doesn't
| have the exchange reserves anymore to uphold a peg.
|
| Where does Bitfinex take the money from to buy tether to
| prevent it from devaluing? Alternatively, who else buys
| tether, arbitrageurs?
| qeternity wrote:
| You're missing the entire premise: where can I go sell my
| USDT directly for USD? Show me where.
|
| Unlike your example where this an existing market that a
| peg has to be supported, there simply isn't a fungible
| USDT/USD market.
| gruez wrote:
| > You're missing the entire premise: where can I go sell
| my USDT directly for USD? Show me where.
|
| https://trade.kraken.com/charts/KRAKEN:USDT-USD
| qeternity wrote:
| I'm not sure what arbitrage you're referring to. But more
| importantly, nobody is selling these freshly printed USDT for
| USD...that's the whole point. They are selling USDT for BTC.
|
| 99% of the USD/USDT trading is fake/wash trading to give the
| illusion of volume.
| jerry1979 wrote:
| If tether is functionally doing a fractional reserve
| scheme, then we should expect a run on the tether bank
| sooner or later.
| mathgenius wrote:
| Kraken has USDT/USD markets. I'm sure there are plenty of
| other places to trade USDT for USD.
|
| https://www.kraken.com/prices/usdt-tether-usd-price-
| chart/us...
| mathgenius wrote:
| As long as tether can provide a small percentage of liquidity
| on USDT/USD then they (arbitrageurs) can maintain the peg.
| This can obviously break down, and has in the past. It's all
| about liquidity...
| raesene9 wrote:
| If you ignore the URL and read the content of this
| http://www.tr0lly.com/bitcoin/the-tether-press-and-
| bitcoins-... it's actually a good theory for what _may_ be
| happening.
|
| It's speculation, but then without audits and accounts of the
| exchanges that use Tether, and Tether itself, speculation
| seems to be about as good an option as there is.
| TomSwirly wrote:
| > However three years on, crypto still does not have a "killer
| app" and is 99.99% used for speculation
|
| With all due respect, this is completely wrong - crypto has the
| same killer app it has for years, and that app is _crime_.
|
| Whether you're buying drugs, paying anonymous extortioners,
| accepting bribes, money laundering, or tax evasion,
| cryptocurrency is the go-to choice for electronic funds
| transfer for your modern criminal.
| shuntress wrote:
| >Bitcoin's narrative has had to morph from "digital currency"
| to "digital gold"
|
| The narrative around bitcoin has always been "It is digital
| currency. It works like gold". Hence the notion of _" mining"_.
|
| EDIT: downvote me if you want but you are flat _wrong_
|
| Section 6 in the bitcoin whitepaper _explicitly_ likens bitcoin
| to gold [0]
|
| > _The steady addition of a constant of amount of new coins is
| analogous to gold miners expending resources to add gold to
| circulation_
|
| [0]: https://bitcoin.org/bitcoin.pdf
| user-the-name wrote:
| > The narrative around bitcoin has always been "It is digital
| currency. It works like gold".
|
| It has not been that for years. It failed miserably as a
| currency, and the current narrative is that it is a "store of
| value".
| gizmo686 wrote:
| I think people are using "gold" in 2 different ways.
|
| In the olden days, gold was actually a currency. The supply
| of coins you could produce was limited by the precious metals
| you had. The amount of paper money you could issue was
| limited by the amount of gold bars you had. In this system,
| gold is still acting like a currency; but a currency with
| very real limitations on the ability of any institution to
| manage it. [0]. This was the original meaning of digital
| gold.
|
| In contrast, modern gold is not used as a currency. It is
| used as a commodity and store of value; and a hedge against
| inflation.
|
| [0] Unlike gold though; bitcoin actually has a predictable
| issuance schedule. There is no sudden spike in Bitcoin
| supplies because prospective suddenly discovered a rich vein.
| deegles wrote:
| My understanding is that the problem is not with Bitcoin, but
| with people buying Bitcoin with "money printed," (or
| unconfirmed-peg) Tether.
|
| The same issue would arise if the USA started printing
| dollars and buying physical gold with it. Is that right?
| Born_Again wrote:
| >>Bitcoin's narrative has had to morph from "digital
| currency" to "digital gold"
|
| I wholeheartedly agree with this. Let's look at some Reddit
| /r/bitcoin posts in January 2014:
|
| https://redditsearch.io/?term=&dataviz=false&aggs=false&subr.
| ..
|
| People were discussing bitcoin being used as a digital
| currency. There was talk of bitcoin being accepted on
| Overstock.com, TigerDirect, and using bitcoin apps on phones
| as a digital wallet. I would argue the majority of people in
| the bitcoin community at the time were genuinely interested
| in the technology and its use as an everyday currency.
|
| Now let's look at some Reddit /r/bitcoin posts in January
| 2020. I picked this date because there weren't any recent
| significant price fluctuations.
|
| https://redditsearch.io/?term=&dataviz=false&aggs=false&subr.
| ..
|
| There was practically zero discussion on using bitcoin as a
| currency. People were only interested in the price and
| treated it as a commodity, just like a digital gold.
|
| > EDIT: downvote me if you want but you are flat wrong
|
| Do people treat bitcoin as a currency or a commodity today?
| shuntress wrote:
| * _The narrative around bitcoin has always been "It is
| digital currency. It works like gold".*_
|
| I don't think we need to get into whether or not gold is a
| currency or a commodity but you are fooling yourself if you
| think that the price of gold is driven by jewelers and PCB
| fabs.
| SilasX wrote:
| I would say it's now more promoted as an uncorrelated asset
| class.
| samvher wrote:
| That may be true but there is definitely a difference between
| the way people talked about it earlier ("later we will all be
| paying with bitcoin") to how it is now ("it's a store of
| value and maybe there is potential for bitcoin-backed
| currencies").
| gruez wrote:
| I think the scaling limitations were well known at the
| beginning. If Bitcoin were to get as large as
| visa/mastercard the blockchain would be growing at a rate
| of a few gigabytes per day, which would kill
| decentralization.
| DennisP wrote:
| It doesn't google anymore and might be gone now, but back
| in the day there was an article on a bitcoin website
| which went through some math, arguing that Bitcoin could
| achieve 4000 transactions per second. People used to link
| to it on a regular basis.
|
| Aside from that, people figured Moore's Law would
| continue at its historical pace, and Bitcoin could grow
| indefinitely at the same pace.
| dylkil wrote:
| the limitations have been researched extensively outside
| of the echo chamber of bitcoin development. It is
| possible to scale a utxo system like bitcoins to hundreds
| of millions of txs per day. Xthinner[1] can compress
| blocksizes by 99%, but bitcoin devs have ignored this
| with handywavy arguments.
|
| [1]https://github.com/jtoomim/xthinner-spec
| gruez wrote:
| >but bitcoin devs have ignored this with handywavy
| arguments.
|
| Can you provide links to these discussions? I searched
| around on google and all the results are relating to
| bitcoin cash. I also searched the usual places that
| bitcoin (non cash) people congregate and turned up
| nothing.
| ryani wrote:
| That page claims it can compress a single transaction
| down to 12-16 bits. Unless the vast majority of btc
| transactions are between the same few wallet addresses,
| this seems impossible? Even if you assume that the
| transaction is an instance of a common known script, you
| still need from-address, to-address, and amount, all of
| which are >16 bit quantities and in general are
| cryptographically random.
|
| The only explanation I can think of is that they are
| relying on a sidechannel to communicate the actual
| transactions, which makes sense in the miner case (the
| utxo pool) but not in the general node case.
|
| Beyond that, I run a BTC node occasionally and the
| bottleneck is validating blocks, not downloading them.
| Transactions are complicated enough right now that I'm
| only able to catch up at about 350x real-time (that is,
| it takes around a full cpu-day to validate a year of
| blocks/transactions).
| nullc wrote:
| A bitcoiner pinged me and asked for my comment here. It
| really sucks that people are so easily bamboozled by
| dishonest scammers.
|
| In the original bitcoin software a node would receive
| every transaction made while it was online twice: once
| when the transaction was first relayed, once when it was
| placed into blocks. This was obviously wasteful, so we
| created and deployed a reconciliation scheme that
| exploits the fact that normally all, or almost all the
| included transactions are already known. https://github.c
| om/bitcoin/bips/blob/master/bip-0152.mediawi...
|
| But because Bitcoin developers are not dishonest scammers
| they didn't run around putting out (no kidding) press
| releases claiming "98.6% compression"-- though that's
| what you get if you compare the size of the BIP152
| message to the size of the block. In reality, since it
| depends on the transaction being known in advance the
| unachievable limit for this class of approaches is a 50%
| bandwidth reduction for a node compared to the original
| behaviour. BIP152 achieves 49.3% out of that 50%, as
| measured on the latest block.
|
| Even before compact blocks was created back in December
| 2015, we knew even smaller could be achieved. E.g. we
| published a scheme that requires asymptotically 0 bytes
| per transaction, only requiring data proportional to size
| of the difference between the block and the recipients
| guess at the next block. But what we found is that the
| simpler scheme actually propagated blocks much faster
| because once the block is down to just a few thousand
| bytes other factors (like CPU time) dominate. Expending a
| lot of additional code and cpu time to take 49.3% closer
| to 50% isn't a win in actual usage.
|
| [And for considerations other than block propagation,
| saving a few extra bytes per block is extremely
| irrelevant.]
|
| It's also the case that some of these dishonestly hyped
| supposed improvements beyond what Bitcoin has done for
| years are actually totally brain-damaged and wouldn't
| work in practice because they're not robust against
| attack-- but there isn't much reason to dive into
| technical minutia because what they _claim to achieve_,
| once you strip off the dishonest marketing, isn't all
| that interesting.
| [deleted]
| CyberDildonics wrote:
| Not this again. The entire bitcoin blockchain fits in $6
| of hard drive space. The average transaction right now is
| more than $11.50. The AVERAGE transaction costs almost
| double what it costs to store the ENTIRE blockchain.
|
| Stop with the storage space nonsense. The only people
| even storing the entire chain are enthusiasts, servers
| and miners. Saying "what if it gets a thousand times as
| many transactions" is ridiculous, but it still wouldn't
| be a problem. A few gigabytes a day? A $300 dollar hard
| drive would still take a decade to fill up. I think the
| few that sync the entire chain handle that.
| shuntress wrote:
| As far as I was aware, this problem was mostly ignored.
|
| It was expected (again, as stated in the whitepaper) that
| truncating transactions (in order to shrink blocks that
| are "old enough") would be able to manage block size well
| enough to stay reasonable.
|
| In my experience (circa ~2011,) this expectation seemed
| to be generally accepted without much question by anyone
| talking about bitcoin. If it was acknowledged as a flaw
| it was usually hand-waved as only likely to be a problem
| 10+ in the the future.
|
| edit: Or that a new network would learn from the bitcoin
| experiment and implement a protocol that works better at
| large scale.
| DennisP wrote:
| As far as new networks go, that appears to be happening.
| birdyrooster wrote:
| It's digital gold you can use to magically transport any drug
| to your doorstep. That's an amazing killer app.
| j0ba wrote:
| Meh, USD is much better for that. Lots more drug dealers
| accept it.
| birdyrooster wrote:
| Not near you, and not safely.
| lawn wrote:
| The whitepaper only likens Bitcoin to gold in regards to the
| emission rate, not to it's supposed usage as "digital gold".
|
| In fact the whitepaper even opens with describing Bitcoin's
| usage for commerce. The very first paragraph in the
| introduction!
|
| The narrative has indeed changed to "digital gold" after it's
| made abundantly clear that Bitcoin is no longer suitable for
| commerce.
| qeternity wrote:
| Too late to edit my original comment but a lot of people
| pointing to the "peg" as proof that Tether is legitimate.
|
| The only peg that exists is the one whereby you should be able
| to go to Tether Inc and redeem USDT for USD 1:1. That peg has
| never ever been demonstrated (publicly).
|
| All the other "pegs" are just cash trading. If I trade USDT/USD
| on Binance...I don't actually have USD. Even on that pair, my
| USD profit/loss are denominated in USDT.
|
| For anyone who disagrees with the above - please show me market
| where I can go sell my USDT directly for USD.
| sekai wrote:
| > For anyone who disagrees with the above - please show me
| market where I can go sell my USDT directly for USD.
|
| Kraken, Bitstamp, did so for 3 years+
| qeternity wrote:
| And I wonder why Bitstamp, a fairly legitimate shop,
| stopped using Tether...
| marcandre wrote:
| Kraken.com has an actual USDT/USD pair you can trade and use
| actual hard currency.
| FabHK wrote:
| Yes, you can trade them there. However, there is no
| mechanism imposed by Kraken to keep the price close to 1.
| It is purely supply and demand. Nothing prevents the price
| of USDT from collapsing (apart from arbitrage predicated on
| exchanging USDT back into USD).
| sjs382 wrote:
| > For anyone who disagrees with the above - please show me
| market where I can go sell my USDT directly for USD.
|
| Genuinely curious, as someone who has never used Binance nor
| USDT:
|
| Why is the "directly" part here significant? If I can USDT
| (Binance) -> USD (Binance) -> BTC (Binance) -> BTC (Coinbase)
| -> USD (Coinbase) -> USD (My Bank), then whats the difference
| other than a few extra steps?
| FabHK wrote:
| Apart from the fact that there are transaction costs and
| time delays (it'll take about half an hour after you bought
| BTC on Binance that you can sell them on Coinbase), what
| guarantees that the BTC price is the same on Coinbase and
| Binance?
|
| Well, arbitrage! But suppose BTC it is much higher on
| Binance. You'd then take USD and transfer them to Coinbase:
|
| USD (Coinbase) -> BTC (Coinbase) -> BTC (Binance) -> USDT
| (Binance) -> ??
|
| Now you need to take these USDT and turn them into USD, to
| keep the arb running. But that is precisely what doesn't
| work.
|
| So: the chain you outline is NOT a way to "directly sell
| USDT for USD", as links can break down.
| atomicnumber3 wrote:
| It's basically the difference between a fiat currency and
| one backed by something.
|
| For example, something vaguely analogous would be:
|
| [Setting: The Olden Days] GP: "I'm concerned because nobody
| has ever tried to take USD to the government and directly
| get silver/gold for it." You: "Why is the "directly" part
| here significant? If I can USD (My Pocket) -> USD (My
| Brokerage) -> Gold (My Brokerage) -> Gold (My Pocket), then
| whats the difference other than a few extra steps?"
|
| The difference is that we never tested to see if the USD is
| actually backed by real gold.
| qeternity wrote:
| You can't USD Binance. That's my point.
| gruez wrote:
| There are easier paths, such as:
|
| USDT -> kraken[1] -> USD -> your bank
|
| or even
|
| USDT -> bitfinex[2] -> your bank
|
| [1] https://trade.kraken.com/charts/KRAKEN:USDT-USD
|
| [2] yes they do allow fiat withdraws
| https://support.bitfinex.com/hc/en-
| us/articles/213919309-Fia...
| tobltobs wrote:
| The killer app of Bitcoin is Ransomware.
| tim333 wrote:
| >does not have a "killer app" and is 99.99% used for
| speculation
|
| You could argue speculation is the killer app. I'm not a fan
| but it's hard to deny it's a huge business and some people seem
| to like it. Kind of like Las Vegas in a way.
| caeril wrote:
| It definitely has a killer app. Probably not a big enough app
| to justify these prices, but one nonetheless.
|
| As Stripe, PayPal, Visa, Gofundme, Patreon, et. al. shut down
| avenues of payments for legal, but unpopular purchases, BTC
| is the obvious workaround.
|
| Vendors of firearms, pornography, legal funds for unpopular
| causes, dissident content creators, etc have become
| increasingly estranged from the "normal" payments market in
| the last few years. BTC is the killer app for this.
| newsclues wrote:
| If BTCs killer app is criminal transactions, then
| regulation is guaranteed.
| dgellow wrote:
| > Vendors of firearms, pornography, legal funds for
| unpopular causes, dissident content creators
|
| Neither pornography, nor legal funds for unpopular cause
| (think WikiLeaks), or dissident creators are criminal. At
| least not in the US or Europe. But they are still blocked
| by the main payment processing companies.
| newsclues wrote:
| The theory and reality don't match.
|
| Drugs are likely the number one things bought using
| crypto as currency.
|
| Firearms and pornography can be bought with dollars if
| you're using crypto to buy them or other unpopular goods
| or services, you are veering dangerously close to black
| markets, which invite regulation.
| caeril wrote:
| Right, but I'm specifically referring to _legal_ , but
| _repressed_ transactions.
| eecks wrote:
| Is it illegal to transfer value from person A to person B
| without the middleman?
| alisonkisk wrote:
| In many cases, yes. It's not the "middleman" that is
| required, but reporting the transaction to the government
| is.
| mmcwilliams wrote:
| If avoiding reporting a transaction is the goal does
| committing the transaction to a public blockchain really
| bypass this? All activity is pseudonymous and in the
| clear.
| puranjay wrote:
| Privacy coins are far more suited for skirting regulations.
| If that's the killer app, you would see mass adoption of
| Monero, not BTC
| TearsInTheRain wrote:
| And we seem to be creating more and more dissidents
| everyday
| FabHK wrote:
| > it's a huge business
|
| Some people make lots of money of it, no doubt.
|
| I'd say to qualify something as a business, there should be
| value creation somewhere along the line. With BTC, I see
| mainly redistribution of value, along with destruction of
| resources.
| nradov wrote:
| The crypto killer app is evading China's currency controls. Pay
| for mining hardware and electricity in renminbi, transfer
| cryptocurrency to foreign countries, exchange for convertible
| fiat hard currency (dollars, euros, etc.).
| user-the-name wrote:
| Worth noting that those dollars and euros come from the
| people buying bitcoins.
|
| And there is no obvious place for further money to come from
| once they want to cash back out.
| doggosphere wrote:
| _However three years on, crypto still does not have a "killer
| app" and is 99.99% used for speculation._
|
| The killer app is decentralized, permissionless, open source,
| and censorship resistant network.
|
| _Bitcoin 's narrative has had to morph from "digital currency"
| to "digital gold"._
|
| Gold morphed from worthless rocks in the the ground, to coins
| traded by traveling merchants, to stores of value that were
| eventually centralized and monopolized by governments.
|
| RE: Tether I don't trust them either, but we need more evidence
| of this alleged printing. We saw that they did remove the 1:1
| peg briefly when Crypto Capital in Panama (?) froze a few
| hundred million of their USD.
|
| _Bitcoin now finds itself a high tech manifestation of the
| very thing that Satoshi sought to address._
|
| Bitcoin is sound. The centralized exchange layer built on top
| of it is dirty.
| agumonkey wrote:
| I find this a little bit too biased. The Bitcoin universe is
| waving between a lot of reason why to love bitcoin and it
| shifts often.
|
| I stopped following the money side of it (atm and sites
| accepting btc) but a vast majority of btc and cryptos
| attention right now.. is simply better yearly returns than
| other kinds of possessions.
| vorpalhex wrote:
| > The killer app is decentralized, permissionless, open
| source, and censorship resistant network.
|
| Yes, but what can I do with that other than toot/tweet/twit
| at other people and buy LSD tabs?
| doggosphere wrote:
| With Bitcoin you own property that can never be confiscated
| or debased by any government.
|
| With IPFS you can host and access files that can't be
| censored. (same level of censorship resistance as torrents)
|
| With Monero you can transact free from surveillance.
|
| The biggest applications on Ethereum right now is
| decentralized finance, with billions of dollars locked in.
| mdoms wrote:
| > With Bitcoin you own property that can never be
| confiscated or debased by any government.
|
| So the killer app for bitcoin is owning bitcoin?
| corrys wrote:
| Bitcoins have been confiscated by many governments. A
| quick Google search reveals many instances of that.
| doggosphere wrote:
| Lets clarify semantics.
|
| Can the government seize Bitcoin directly? No.
|
| Can the government seize your bank account directly? Yes.
|
| Can they threaten you with jail if you don't hand over
| your Bitcoin? Yes
| gamblor956 wrote:
| _Can the government seize Bitcoin directly? No._
|
| Yes, it can. The U.S. government has _in fact_ seized
| Bitcoin directly and sold it at auction several times. It
| is arguably the single largest non-exchange seller of
| Bitcoin in Bitcoin 's history.
| doggosphere wrote:
| It can only be taken in these events:
|
| 1) Seed phrases are discovered (ie. plaintext document or
| physical artifact).
|
| 2) Seed phrases are handed over by willing party.
|
| If #1 doesn't exist, then #2 is the only option.
| elvatoloco55 wrote:
| Nobody here seems interested in actually understanding
| how BTC works. It looks like a circle jerk of pseudo
| intellectuals coping with not buying early.
| schmichael wrote:
| > With Bitcoin you own property that can never be
| confiscated or debased by any government.
|
| Private keys can be confiscated like anything else. They
| won't do you much good if you're thrown in prison for not
| turning them over if legally compelled. Sure you can try
| to hide your ownership, but my point is that actual
| cryptocurrencies are only one layer of very deep opsec
| you need to resist state actors. For the common illegal
| goods consumer it's unlikely to do much more than provide
| a false sense of security due to other opsec failures
| (use of phones, use of cookies, use of mailing addresses,
| use of non-e2e chat, using a hosted wallet, lack of
| anonymous vpn, etc etc etc).
|
| > The biggest applications on Ethereum right now is
| decentralized finance, with billions of dollars locked
| in.
|
| Interesting use of "dollars." How much is actually
| Tether? How much is manipulated market cap (through wash
| trading or more convoluted defi mechanisms)? How much is
| actually liquid USD?
| doggosphere wrote:
| A wrench attack will always be the easiest vector. That
| said, there is no other asset in history that gives you
| this level of security for such marginal cost. The cost
| of securing $100 is essentially the same as the cost of
| securing $100m.
| ProZsolt wrote:
| The chances of loosing $100 is essentially the same as
| the chances of loosing $100m. If you loose your private
| key nobody can help you recover your money.
| doggosphere wrote:
| I would hope that someone with $100m in crypto is smart
| enough to not leave their seed words on a piece of paper
| on their coffee table.
|
| Your exactly correct that nobody can help you recover
| your money if you lose your keys.
| damon_c wrote:
| Here are a few projects that use Ethereum to do things that
| have nothing to do with acquiring chemicals or crypto asset
| speculation.
|
| https://www.nucypher.com https://filecoin.io
| https://alice.si https://www.augur.net
| gamblor956 wrote:
| I can do all that right now without inserting a power-
| wasting cryptocoin layer.
| doggosphere wrote:
| Go ahead subscribe to Pornhub with your credit card. Or
| donate to Wikileaks with your paypal.
| Proven wrote:
| I don't think that's how gold became money.
|
| It may have been less hoarded and used only for ornaments
| because there was less trade and people were busy enough to
| find, hunt or cultivate enough to survive. As trade took off,
| gold became more useful because it _already was_ universally
| valued everywhere.
|
| > to coins traded by traveling merchants, to stores of value
|
| Why would I accept gold coin in exchange for anything if I
| don't already consider it store of value? It must had been
| considered as store of value before merchants started using
| it as money.
| viraptor wrote:
| > The killer app is decentralized, permissionless, open
| source, and censorship resistant network.
|
| That's the "how" part, not the "what". What's the killer app
| implemented using that network? What do we do with it?
| doggosphere wrote:
| Lots of examples in this thread.
|
| A replacement for gold is one.
| pionar wrote:
| > A replacement for gold is one.
|
| Gold is relatively stable and has physical backing. BTC
| does not.
| doggosphere wrote:
| _Gold is relatively stable and has physical backing._
|
| Up to 4% of China's gold reserves could be fake. Gold
| fraud article: https://economictimes.indiatimes.com/news/
| international/worl...
|
| Bitcoin is open source and completely auditable in an
| instant.
|
| As the price of gold goes up, the quantity supplied goes
| up. Bitcoin's issuance protocol is fixed and unchangeable
| unless the network agrees.
|
| The cost of securing or transporting $1b of gold bars is
| magnitudes higher than the cost of securing $1b of
| Bitcoin.
| incrudible wrote:
| Securing $1 billion of bitcoin? Who needs to secure $827
| million of Bitcoin? Securing $937 million of Bitcoin is
| not a killer app.
|
| In all seriousness, securing the _value_ of Bitcoin is
| the problem that is not easily solved.
| elvatoloco55 wrote:
| Michael Saylor and every single fund that have bought
| millions in Bitcoin?
|
| Millions of people that are trying to secure value from
| totalitarian goverments? Is it me or people here are
| being trolls on purpose?
| doggosphere wrote:
| Bitcoin is bits of data on a network. It does exactly
| what its supposed to do; a dictionary for strings to
| integers.
|
| Securing external value to people is not a goal or
| responsibility of Bitcoin. That's simply a consequence to
| how we as humans choose to use scarce assets.
| rednerrus wrote:
| The hurdle for bitcoin is finding a way for people to turn it
| into a currency they can use. This is where you end up with a
| centralized exchange layer built on top of it.
|
| I can make a $12,000,000 transaction for $.35 but if I
| actually want to get the money, I have to pay 2.5% to a legit
| exchange or take my chances on some janky ass exchange. Why
| not just transfer the money via ACH and pay the small fee and
| save myself the headache?
| doggosphere wrote:
| In a long enough time frame, people transact with
| cryptoassets directly and don't need to exchange into fiat.
| We are early in this development, money as we know it is
| changing.
| jerry1979 wrote:
| You can start by asking people to take bitcoin for various
| transactions. For example, my friends and I all use it
| settle debts between each other.
| anakaine wrote:
| The barriers to entry, usage, and understanding are just
| too high for average Joe. That and how the value of their
| money fluctuates compared to fiat makes it more difficult
| to use as a daily currency. Also, when things go wrong
| there's nobody to turn to in most cases.
| nly wrote:
| Bet you don't lend one another bitcoin though
| gruez wrote:
| What kind of an exchange charges 2.5%?
| lawtalkinghuman wrote:
| > The killer app is decentralized, permissionless, open
| source, and censorship resistant network.
|
| That's like saying the killer app of the internet is the
| internet.
|
| The web gives me access to information quicker and easier
| than going to a library or bookshop. Email and IM means I can
| communicate with people in other countries quicker and easier
| than I could by post. Crypto doesn't change anything.
|
| A few drug dealers and some people living in countries with
| hyperinflation may care about "permissionlessness" and
| "censorship* resistance", but for most people, actual money
| is far, far more convenient.
|
| * That's some Orwellian newspeak, btw. If someone defrauds me
| and a court of law ensures that I am restituted, the reversal
| of that fraudulent transaction isn't "censorship" because
| stealing money isn't "speech" or "expression".
| justicezyx wrote:
| Digital gold is the kill app. That is enough to justify its
| market cap.
|
| For example, Chinese can use bit coin to exchange large
| amount of funds to other currency, although this can only
| be done in private because the official ban.
| liuliu wrote:
| You cannot. There is no exchange from CNY to Bitcoin.
| justicezyx wrote:
| Come on, it was banned, but there is plenty of
| underground channel... Why is that even needed to be
| mentioned...
|
| Maybe I should be more clear in the OP.
| jcranmer wrote:
| > RE: Tether I don't trust them either, but we need more
| evidence of this alleged printing. We saw that they did
| remove the 1:1 peg briefly when Crypto Capital in Panama (?)
| froze a few hundred million of their USD.
|
| Tether's page (https://wallet.tether.to/transparency) claims
| $23.6 billion in total assets. Despite their claims to
| transparency, I see no report of what those assets are, how
| risky those assets are, or any audit that assets they even
| own those assets. Their front page has a big link saying
| "Proof of funds", which leads to an audit published 21/2
| years ago, claiming only $2.5 billion in cash in two bank
| accounts with unnamed banks.
|
| For a company that claims to be "always fully transparent,"
| that is shockingly opaque.
| Forbo wrote:
| Especially considering their last auditor walked away from
| the situation, I'd say the whole project reeks.
| agumonkey wrote:
| > Bitcoin's narrative has had to morph from "digital currency"
| to "digital gold".
|
| M. Saylor is preaching this it seems. It's just a better asset
| (less supply, no mass~)
| marfusios wrote:
| That's gonna be the killer app, low-cost global payments,
| finally we can accept international payments from non-crypto
| customers without ridiculous SWIFT or PayPal fees...
| https://jimmymow.medium.com/announcing-strike-global-2392b90...
| shuckles wrote:
| Most global payments are transactions, not cash transfers,
| and the transacting parties have banking relationships that
| make those transfers low cost and strictly superior to
| Bitcoin.
| marfusios wrote:
| As a freelancer based in EU working on some US projects,
| I'm forced to pay 5.5% fee to PayPal or some fix fee to the
| banks (SWIFT payment). Plus conversion fee from USD to EUR
| (or my local currency).
|
| That's too high for just a simple thing as receiving money
| from different country. Really looking forward for that
| Strike Global.
| itsArtur wrote:
| Use Revolut
| nly wrote:
| TransferWise?
| logifail wrote:
| > I'm forced to pay 5.5% fee [..] > Plus conversion fee
| from USD to EUR [...] > a simple thing as receiving money
| from different country
|
| Moving money between currencies has never been easier, or
| cheaper. I would humbly suggest you're doing it wrong.
| elvatoloco55 wrote:
| Oh really? Fees are low for accepting foreign currency
| for a business, please do tell your secrets. Lol, classic
| US centric view
| beaner wrote:
| How do you square this with the observation that other fiat-
| backed stablecoins like USDC, which are obviously legitimate,
| are also printing massively?
|
| It would seem to me that if transparent stablecoins with
| utility are going up, the simplest explanation for tether going
| up is that it serves the same role for people who have either
| become accustomed to it from its earlier availability, or have
| it as their only option due to jurisdiction. Not anything
| nefarious.
|
| There seems to be little actual evidence to support conspiracy
| theories that Bitcoin's price movements are due to
| mismanagement of tether.
| therein wrote:
| Except for timing time after time. Most rallies have a
| corresponding Tether print right prior to them.
| gruez wrote:
| The price of an asset goes up when money is being poured
| into the asset. For many exchanges "money" means USDT, so
| it makes perfect sense that USDT would be printed before a
| rally, regardless of malfeasance on tether's part.
| gillesjacobs wrote:
| Is there any proof or data on Tether issuance preceding
| rallies? Because I have seen this claim often made on
| Twitter, but never with any sources.
|
| I personally dislike Tether and avoid it, but strong claims
| require strong evidence.
| long wrote:
| Here's an econ paper that studies that question: https://
| www.researchgate.net/publication/342185292_Is_Bitcoi...
| gillesjacobs wrote:
| Thanks, I will have to read it carefully, but from the
| abstract it doesn't seem as simple as "increased Tether
| printing makes BTC rally." But if there is in fact a
| statistically significant correlation, I would personally
| wager there's causation and hedge my bets accordingly.
| long wrote:
| I think the abstract does effectively say that: "these
| patterns are most consistent with the supply-based
| hypothesis of unbacked digital money inflating
| cryptocurrency prices." And this point is made more
| forcefully in the paper.
|
| FWIW, I don't have a strong opinion on the evidence
| presented in the paper -- the analyses seem sensible, but
| this isn't my field of expertise, so I'd be hard pressed
| to point out, for example, what alternative analyses they
| could / should have done.
|
| Also, it's not even obvious to me that unbacked Tether
| causing the BTC price rallies is necessarily a reason to
| pull out; markets are weird.
| ac29 wrote:
| The argument isnt that there are no legitimate inflows of
| other stablecoins (or traditional fiat currency) into bitcoin
| prices. The problem is that Tether is ~80% of inflows [1],
| and is dubiously backed at best. If 80% of the price support
| disappears, prices will fall, and legitimate buy side
| interest from other stablecoins or fiat will almost certainly
| shrink as well.
|
| [1] https://twitter.com/JacobOracle/status/134613308787753779
| 2/p...
| beaner wrote:
| I think the author might be confusing volume for inflow,
| but they're 2 different things.
| dylkil wrote:
| >Bitcoin's narrative has had to morph from "digital currency"
| to "digital gold".
|
| This narrative was an intentional morphing by various actors
| within the space (Blockstream) who believed raising the
| blocksize to allow higher throughput would cause
| 'centralisation'. Instead they want people to use layer 2
| solutions such as blockstreams own federated product Liquid.
| suikadayo wrote:
| I don't understand why you're being downvoted. Anybody who
| was here before 2017 know what happened.
| tromp wrote:
| As explained by blockstream co-founder Greg Maxwell in [1],
| the blocksize is constrained in order to ensure a steady
| backlog of fee paying transactions, that allow bitcoin to
| remain secure in the long term when block subsidy becomes
| insignificant.
|
| [1] https://bitcointalk.org/index.php?topic=5306354.0
| dylkil wrote:
| >that allow bitcoin to remain secure in the long term when
| block subsidy becomes insignificant.
|
| this line of reasoning is silly. To match the current block
| subsidy with the current block size limit when miner
| subsidy runs out the average transaction fee will need to
| be >$127.
|
| $45mil daily revenue / 350,000 txs per day
|
| OR, you could increase the block size limit to 10mb,
| allowing 3.5mil txs per day, or 100mb allowing 35mil txs
| per day. Then the average fee paid per tx is significant
| lower.
|
| The reason this was argued against by blockstream was
| because a bigger blocksize means more storage is needed by
| the miner and more txs means better hardware and bandwidth
| to process them, effectively pricing out normal people from
| running full nodes.
|
| Essentially, the ability for normal people to send a
| transaction cheaply is being sacrificed so that normal
| people can setup a full node. Counter intuitive imo.
| suikadayo wrote:
| > normal people can setup a full node
|
| This argument was really silly too because people can
| afford higher capacity drives, and better internet
| connection according to Moore's Law
| FabHK wrote:
| > when miner subsidy runs out the average transaction fee
| will need to be >$127.
|
| Stein's Law:
|
| "If something cannot go on forever, it will stop."
|
| https://en.wikipedia.org/wiki/Herbert_Stein#Stein's_Law
| Mc_Big_G wrote:
| > _Bitcoin 's narrative has had to morph from "digital
| currency" to "digital gold_
|
| "Gold's narrative has had to morph from currency to store of
| wealth" Circa 1971
| sneak wrote:
| 1 BTC will still be 1 BTC after the Tether scam and scammers
| are all history.
| qeternity wrote:
| This is true. It's also the tremendous irony of bitcoin
| evangelists narrative that fiat is worthless yet constantly
| touting every ATH (which is priced in that supposedly
| worthless fiat). Who cares what BTCUSD is if USD worthless?
|
| And then you realize that this is pure speculation and the
| most ardent supporters are just praying for the greater fool
| theory to rain good fortune on them.
|
| You need look no further than Coinbase, supposed beacon of
| our crypto future, IPO'ing and raising money in...that
| worthless green piece of paper known as the US Dollar.
| ekianjo wrote:
| > You need look no further than Coinbase, supposed beacon
| of our crypto future, IPO'ing and raising money in...that
| worthless green piece of paper known as the US Dollar.
|
| is it possible to do an ipo in crypto?
| qeternity wrote:
| ...you mean like on one of the many many crypto
| exchanges?
|
| An ICO is just an IPO by a different name. There are also
| crypto stock exchanges.
|
| But more importantly, even if it weren't possible, why
| would they ever sell their shares for worthless legacy
| money? Unless...
| jdhn wrote:
| The vast, vast majority of "bitcoin evangelists" couldn't
| care less about the actual mechanics of Bitcoin. They don't
| care that it was created as a digital F-You to fiat
| currency, and they don't care that it enables you to be
| your own bank. Just look at /r/bitcoin. It's 99% price/hodl
| memes, and 1% posts about the protocol & enhancements to
| the protocol itself.
| tromp wrote:
| For bitcoin protocol discussion there is the Development
| & Technical Discussion [1] on bitcointalk.
|
| Some general cryptocurrency technical discussion can be
| found on r/CryptoTechnology [2]
|
| [1] https://bitcointalk.org/index.php?board=6.0
|
| [2] https://www.reddit.com/r/CryptoTechnology
| sneak wrote:
| In the decades-old tradition of foss collaboration, there
| is also bitcoin-dev@lists.linuxfoundation.org, which is
| quite good.
|
| https://lists.linuxfoundation.org/mailman/listinfo/bitcoi
| n-d...
| michaelchisari wrote:
| And twenty-five years on, 1 Beanie Baby = 1 Beanie Baby.
| awesomeandgreat wrote:
| https://www.ebay.com/itm/1st-Generation-Millenium-Beanie-
| Bab...
| gruez wrote:
| Can't you literally make more beanie babies?
| alisonkisk wrote:
| No, only counterfeits.
| gruez wrote:
| Did they pledge not to make any more, or did they just
| stop making them with no commitment either way?
| Tepix wrote:
| Perhaps we can go back to buying a pizza for 1 BTC when this
| is all over.
| onion2k wrote:
| I'll happily sell you a pizza for 1 BTC today if you want.
| tim333 wrote:
| Not going to happen. It's a mindshare thing. If there are
| 10 million people who think I may as well have a bit of my
| portfolio in bitcoin that gives it value and that's
| probably not going away in a hurry.
|
| If anything it'll get worse as it goes from 1 million to 10
| million to 100 million. Back when 1 bitcoin = 1 pizza there
| were perhaps 1000 people into it?
| Cthulhu_ wrote:
| You're not wrong, it's just that nobody cares about BTC
| itself, but only about its value relative to USD.
|
| Crypto is not a currency but an investment product; can we
| please just accept that and talk about it for what it is?
| leppr wrote:
| "Nobody" is an exaggeration. There is a big community of
| enthusiasts who enjoy cryptocurrencies for what they are
| and enable, not for their USD value in the markets.
| griffoa wrote:
| What do they enable?
|
| Is what they enable worth $40.000 to the enthusiasts?
| leppr wrote:
| _> What do they enable?_
|
| I won't make the case for cryptocurrencies here, have a
| look at ethereum.org for instance.
|
| _> Is what they enable worth $40.000 to the
| enthusiasts?_
|
| I'm not denying that the current price hike and media
| attention has little to do with any other aspect than
| "decentralized ponzi"/dollar escape. Was just correcting
| a false statement.
| mmiliauskas wrote:
| Did you copy/paste this from 2017? :D
| qeternity wrote:
| The fact that the above still remains true 3 years later is
| pretty damning.
| tim333 wrote:
| It also suggests things will go on and we'll be in much the
| same situation in years going forward.
| blueline wrote:
| As Keynes famously said, "Past performance is a guarantee
| of future results"
| virgilp wrote:
| No it does not - that's an invalid inductive conclusion.
|
| There are clear deadlines that may change everything
| (apparently Jan 15th might be one of them, from the
| twitter thread). Justice takes time, but trials do
| eventually come to a conclusion. If that conclusion is to
| kill the mechanism that pumps BTC, then all bets are off.
| JohnJamesRambo wrote:
| The killer app for Bitcoin is escaping government fiat money
| that is backed by literally nothing at all and is being printed
| at increasingly alarming rates. 40% of all USD ever created
| were "made" in 2020. That will have repercussions for decades
| and isn't a currency I want to stay in.
|
| https://fred.stlouisfed.org/series/M1
|
| Ironically (or not) Bitcoin was created in 2009 right when that
| graph gets really crazy.
| TomSwirly wrote:
| > government fiat money that is backed by literally nothing
| at all
|
| It would be really nice for people to spend even a few
| minutes thinking about how money works, or open a textbook
| even just to learn what you disagree with.
|
| It's tiresome to explain over and over and over again to
| people how the "full faith and credit of the United States"
| is not "nothing at all" but in fact a guarantee of great
| value, at least as good as any on any other security, and one
| that is quite measurable (by for example comparing the prices
| of full faith and credit securities with other almost
| identical securities without this guarantee).
|
| On the contrary, I'd say that it's the cryptocurrencies that
| _by design_ are based on nothing at all.
| elvatoloco55 wrote:
| Whats is the value of the full faith and credit of
| Venezuela, Argentina, Ukraine, India, Mexico etc etc?
|
| Please do share your limited US centric view!
| qeternity wrote:
| Backed by nothing...as opposed to bitcoin?
|
| People who repeat this don't understand that fiat money is
| based on trust...and that is not a bad thing.
|
| This is why blockchain is fundamentally stunted: the global
| society is based on trust and cooperation. Trustless systems
| will never be able to compete in these arenas.
| gthaman wrote:
| _yawn_
|
| speaking of jumping the shark, have you seen what
| governments have been up to lately ?
|
| interest rates at a 5,000 year low, moral hazard abound &
| global fiat collapse imminent in the best case and in the
| worst case we have banks/elites/governments who are going
| to be looking to further enslave those in debt and forced
| out of business/work with some dystopian debt forgiveness
| scheme involving a 'vaccine' schedule and travel
| restrictions or whatever else (use your imagination).
|
| the truth is that everything mentioned in these comments
| was an argument that had already been had years ago - the
| markets reflect that - but i did enjoy reading the last
| sentence of your original comment and thinking to myself
| "am I reading Time Magazine ?"
| qeternity wrote:
| 1) trying to distract the above problems by pointing out
| other issues doesn't make them go away
|
| 2) you talk about fiat collapse being imminent...USDT is
| worth far less than any fiat (see: nothing) I don't get
| how these ardent fiat haters don't see their entire
| ecosystem has been coopted by something that has
| infinitely less value than the thing they so despise
| mockery wrote:
| Seems to me like you're tacitly agreeing with GP here -
| you're just making a claim about which currency system
| you trust more! (And attempting to convince others of the
| same position.)
| mkr-hn wrote:
| And yet people still buy T-bills.
| user22 wrote:
| I have a question, isn't the problem with the gold standard
| that the amount of dollars is fixed and in order to have
| enough currency to drive a rapidly growing economy you would
| in essence be buying a gallon of milk for .25 cents?
|
| It seems to me that either you the amount of currency in
| circulation needs to increase or the value of the existing
| currency needs to increase.
|
| Taking into account the gold standard was used for possibly
| centuries (not sure) was this problem encountered before and
| how was it solved?
| ldiracdelta wrote:
| Yes. That is called deflation. It also has to do with
| fractional reserve banking. The fraction of your
| outstanding dollars that you could actually cover with
| gold. If no one ever wants to make a run on your bank, you
| can keep the fraction very low.
| user22 wrote:
| I understand the deflation part, but my question really
| was is it an economy the size of the united states even
| possible if we stayed on the gold standard.
| TearsInTheRain wrote:
| Not having enough money to transact would definitely have
| suppressed our economic growth, but then again maybe we
| would have gotten really good at mining for gold to make
| up for it
| Ekaros wrote:
| "Really good at mining." This might be good point to
| compare with BTC. Where huge amounts of electricity is
| spend on doing essentially useless calculations, outside
| keeping the system safe and running.
|
| Good at mining would have meant spending good part of our
| economic output to mine gold and then just storing it
| somewhere or moving it around...
| FabHK wrote:
| My rule of thumb for money supply:
|
| adjustable, with a benign regulator > fixed > adjustable,
| with a corrupt regulator
|
| So, the aim shouldn't be a return to the gold standard or a
| switch to BTC, but to make sure that central banks can do
| their job without interference from politicians.
| DennisP wrote:
| To the left of that list I'd put "self-adjusting, without
| needing a regulator."
|
| Hayek argued that a system of competitive privately-
| issued currencies would achieve that. I'm not qualified
| to say whether he was correct, but an economy built on
| cryptocurrencies would be exactly that.
| spiralx wrote:
| A shortage of bullion in Europe during the 15th century
| caused problems everywhere. That was followed by a huge
| influx of gold from the Americas in the 16th century, which
| also caused massive problems across the continent!
|
| https://en.wikipedia.org/wiki/Great_Bullion_Famine
|
| https://en.wikipedia.org/wiki/Price_revolution
|
| Both under- and over-supply had negative effects on the
| economies of Europe.
|
| The gold standard really was a primitive fiat currency
| anyway, governments would debase coins so they contained
| less gold in order to expand the money supply for instance.
| And only a small fraction of coins would be gold anyway,
| silver was far more common - the Pound Sterling takes it's
| name from a pound of silver from the easterlings (Germans).
| Paper money just made it obvious that physical currency was
| only a representation of wealth and not a fixed unit of
| wealth itself.
|
| The gold standard is basically a political myth about a
| system that never really existed. Money is a very abstract
| concept, and reducing it to physical tokens and easily
| intuitive rules is appealing to many.
| [deleted]
| JohnJamesRambo wrote:
| https://wtfhappenedin1971.com/
|
| This was posted to HN and it was quite eye-opening. For
| those that don't know, 1971 was when the gold standard was
| abandoned by Nixon. I don't know if the graphs are cherry-
| picked and I hope they were honestly since the US is never
| going back to the gold standard and it seems to have far-
| reaching negative effects in every aspect of human life.
|
| To answer your .25 cent milk question it seems to have not
| been a problem in history and health of the country before
| 1971. The profits and benefits of the rapidly growing
| economy have pretty much all gone to the ultra wealthy that
| are nearest to and in control of the money printer.
| openasocket wrote:
| I think this is a gigantic leap. They show a whole bunch
| of graphs without even advancing a theory as to how
| abandoning the gold standard caused a decline in, for
| example, employee compensation growth. Or divorce rates.
| Or ... obesity rates, really? There's so many graphs on
| here that it would take forever to dispute all of them,
| but here's some general points.
|
| 1. A lot of these graphs start at 1940 or 1950, showing a
| change in the trend in the early 1970s. But that was the
| end of WW2, where Europe was in ruins and rebuilding and
| America saw a massive increase in prosperity and economic
| output. That was a pretty unique period, it's only
| natural for that trend to diminish or change over time.
|
| 2. A hell of a lot happened in the late 60s and early
| 70s, not just abandoning the gold standard. One of these
| graphs is of the incarceration rate. Do you think we
| started seeing mass incarceration at that time because we
| abandoned the gold standard, or do you think it was
| because of the war on drugs?
|
| 3. Some of these graphs are deliberately misleading. One
| is of the cumulative inflation rate, and seems to show
| the inflation accelerate in the early 1970s. Except a
| healthy economy should have a steady inflation rate each
| year (of around 2% I believe), so this graph is supposed
| to be exponential! They just picked the right window so
| that 1971 is the inflection point.
| hannasanarion wrote:
| The change from the gold standard is almost certainly a
| coincidence. Whether the dollar is backed by gold or
| government promises doesn't make businesses decide to
| give less money to their workers and more to their CEOs.
|
| A much more relevant development in the 70s was the
| switch in economic policy priorities from demand-side to
| supply-side. Nixon was the first president who
| prioritized tax cuts, union busting, subsidies, and
| legalizing outsourcing to cheaper labor markets in China
| and SEA. Every government since has given corporations a
| blank check to cut labor costs by any means necessary to
| prioritize profit.
| chalst wrote:
| Those graphs paint a fair picture of the nature of the
| crisis, but I am not so keen on their explanation.
|
| Nixon ended gold convertability, but the USD was not on a
| true gold standard and was in danger of not being able to
| fulfill this obligation. The standard was Bretton Woods,
| it was an international framework for finance, and it was
| the failure of the framework together with the OPEC oil
| crisis that caused the mess documented in those graphs.
| notahacker wrote:
| USD is backed by being valid for the redemption of
| outstanding USD denominated invoices, loan repayments and tax
| bills, all of which ensures demand to possess the currency
| and are likely to continue to exist in increasing quantities
| in future.
|
| "Escaping" that for something which literally is backed by
| nothing at all is a strange move.
| puranjay wrote:
| > literally backed by nothing
|
| Backed by $750B in annual military spending
| fuzzylightbulb wrote:
| > backed by literally nothing
|
| It is the only thing the government accepts for tax payments.
| Given that you can be arrested for not paying your taxes it
| is "backed" by the barrel of a gun, a threat to your very
| being. In one sense this is the only real thing there is.
| freewilly1040 wrote:
| This argument doesn't really refute the argument for
| bitcoin as digital gold. It's not as though you can't
| exchange bitcoin to pay your taxes.
| graeme wrote:
| Gold has an intrinsic use value. Maybe not as high as its
| current monetary value, but it isn't zero.
|
| Bitcoin has no floor. You can only exchange bitcoin for
| taxes if someone wants the bitcoin.
| njarboe wrote:
| Gold and silver became money for similar reasons
| (probably). Kings and Emperors found that supplying their
| armies was much easier (especially in peace time) if they
| used the method of taxing the population in gold and/or
| silver and then using that to pay their soldiers who would
| supply themselves on the open market. That way you did not
| have the standard problems of a planned economy. The
| peasants have now need for gold, so they would not
| need/want to trade stuff for it unless they were forced to
| have some to give to the tax man. It's much more
| complicated than that, of course, but like fiat money, gold
| and silver do not have much intrinsic value besides using
| it to show off your wealth.
| chaostheory wrote:
| Maybe they didn't have any intrinsic value in the past
| besides looking pretty but in the modern era both gold
| and silver have industrial uses. They are not just stores
| of value. One could also argue that both metals also had
| intrinsic value in the past since both metals were used
| in jewelry and various items to make them look good.
| freewilly1040 wrote:
| The industrial usefulness is an irrelevant byproduct when
| considering gold and silver as an investment.
|
| Put another way, if people lost faith in gold as an
| investment tomorrow, and the value fell to the economic
| value of the industrial use cases, investors in gold
| would be ruined.
| chaostheory wrote:
| It is not irrelevant if the price is based on anything
| else besides raw speculation. Gold and silver have always
| had utility outside of trading.
| paulgb wrote:
| Indeed. A thought experiment: say the US government created
| a USD-prime currency that floated freely from USD. You
| could still use the USD in private transactions, but the US
| government would only transact and tax in USD-prime. What
| would be the fate of the original USD?
|
| My belief that it would go to zero. I'm curious whether
| "fiat is backed by nothing" proponents would disagree.
| nicky0 wrote:
| Both fiat currency and Bitcoin are backed by the same
| thing: mass belief. An incredibly powerful thing.
| paulgb wrote:
| Yep, but my point is that one is mass belief that the US
| government will continue wanting USD, the other is a mass
| belief that other people will continue wanting BTC. Both
| could be right, both could be wrong, but they are not the
| same proposition.
| nicky0 wrote:
| Don't forget that the US gov itself is also propped up by
| mass belief. Its authority rests in the people.
|
| Now you might say "actually its authority rests on people
| with guns", but that's only to the extent that the people
| with the guns believe in the governments's authority to
| tell them who to point them at.
|
| Underneath all is belief and sentiment.
| Acrobatic_Road wrote:
| >It is the only thing the government accepts for tax
| payments. Given that you can be arrested for not paying
| your taxes it is "backed" by the barrel of a gun, a threat
| to your very being. In one sense this is the only real
| thing there is.
|
| That's more than enough reason why we should try something
| else. It doesn't inspire a lot of confidence. By that
| reasoning, the USD has the same sort of backing as the
| Venezuelan Bolivar. So what's to stop the prior from
| becoming like the latter?
| vorpalhex wrote:
| One has more guns(planes, tanks, etc) than the other.
| chalst wrote:
| The 40% relates essentially to cash-like assets, which is a
| tiny part of the total USD money supply. The total has not
| grown drastically.
|
| See https://en.m.wikipedia.org/wiki/Money_supply
| patagonia wrote:
| Money is not property. Money is an entry on a ledger, which
| tracks credits and debits. So yes, fiat currency is not
| redeemable for a physical asset. But if it was redeemable,
| what ensures that say gold or a chicken will suffice to
| settle a debt or serve as credit for a future transaction.
| Chickens die and gold is only as valuable as your skills as a
| trader. The ledger and all of the social norms and
| institutional structures that accompany it is what maintains
| financial wealth.
|
| Preventing debasement of currency via inflation via printing
| money, which a lot of people use as their go to argument
| against fiat money, is simply adding economy wide debt to the
| ledger. This is necessary from time to time especially during
| crises and especially in a services/financial services/
| intellectual property heavy economy.
|
| If no money existed, at all, how would you receive
| compensation for providing work of an IP nature to your
| neighbor. You would need either a perfect trade (you really
| want their chicken it's just the right amount of chicken for
| you) or you take an iou. Which is a debt. Now have them write
| that iou down on a piece of paper and hand it to you. Your
| neighbor just printed money. Not so crazy.
| [deleted]
| raesene9 wrote:
| That only works when people take payment in BTC without
| translating the value provided back to a Fiat currency.
|
| Until that time, expansion of the USD (or other Fiat) supply
| impacts the "value" that BTC has.
| dmichulke wrote:
| During the gold standard, did people take payment in gold?
|
| I don't think so...
|
| They used paper that symbolized "withdrawal rights to
| gold". USD (or any other piece of paper that people agree
| has a value) is a perfect currency for exchange, it's just
| not a great store of value.
| FabHK wrote:
| > did people take payment in gold?
|
| No, but prices were denominated in gold, effectively, as
| the price of gold was fixed. That was the whole point.
| raesene9 wrote:
| The point I was responding to was saying that they wanted
| to get away from USD and that this was BTC's killer app.
|
| My point is that you can't "get away" from USD, while the
| BTC market is effectively tied to USD.
|
| so if the USD supply is massively inflated, and people
| can use those USD to buy BTC, the tie is still there.
|
| If and when people denominate their goods and services in
| BTC without any reference to a fiat amount, then they are
| decoupled and BTC loses the tie to USD.
| Majromax wrote:
| > USD [...] is a perfect currency for exchange, it's just
| not a great store of value.
|
| USD is a _fantastic_ store of value. Since 1982 (arguably
| the beginning of the modern inflation-targeting era), the
| USD has lost no more than 6.3% of its value year-over-
| year, nor gained more than 2% (CPI measured, source
| https://fred.stlouisfed.org/series/CPIAUCSL#0).
|
| In contrast since 2016, Bitcoin has 60% of its value
| year-over-year (2018) and gained 1700% (also 2018).
|
| A store of value is _not_ a story of appreciation and
| hoping for a gain, it 's a story about holding a stable
| and most importantly predictable value into the future.
| The USD more than satisfies this condition. Bitcoin does
| not, no matter its speculative merits.
|
| Most importantly, society does not owe people a fictional
| store of value guaranteed to never lose purchasing power.
| People don't eat quarters, nor do they live under dollar
| bills. It strains credulity that a nominal token (however
| minted) should hold a guaranteed value, without taking
| capital-like risks required of any productive investment.
| csomar wrote:
| OP gives no proof that Tether is not holding 1:1 reserves. There
| is, however, a good proof that they do: Tether has held the 1:1
| beg pretty well recently. Bitcoin price dropped to $4.000 last
| year and Tether exchange rate has held pretty well. It is
| important to mention that USDT is still liquid despite the lack
| of USD on/off-ramps. People regularly sell USDT on the offline
| market, and can exchange to USDC on many exchanges.
|
| > But Tether is printing so much money.
|
| So is USDC, and the price of Bitcoin is going higher. This means
| Bitcoiners have lots of value in Bitcoin and some of them are
| going to convert that value to USD. They are mainly using USDT
| for that, for whatever reason.
|
| > Tether printing press is driving Bitcoin price.
|
| Wrong. My proof for that is "where is the premium to buy
| Bitcoin". In a very liquid market (which for the most part,
| crypto is), prices should be the same up to the costs
| (transaction and banking fees). Prices have been higher in
| Coinbase during this run. As I am typing right now, Coinbase
| prices are 50-80 dollars higher for Bitcoin. GBTC is even more
| ridiculous with 10-15% premium on price (but also GBTC is less
| liquid/arb-able). This signifies that demand is coming from US
| retail and institutional investors.
|
| > Tether is holding USD as securities/derivatives/whatever.
|
| All of them are. See: https://omarabid.com/usd-stable-coins
| Slartie wrote:
| If Tether Ltd. had at any point in time made any significant
| USDT -> USD redemptions that outweighed the new USDT given out
| to new buyers, we should have seen that by a significant number
| of Tethers being destroyed. Looking at the historic Tether
| market cap on CoinMarketCap - which is practically equal to all
| non-destroyed tethers due to USDT being pegged to the USD -
| however does not reveal any significant drop in Tether market
| cap ever that could be an indication of actual redemptions. And
| I refuse to believe that in all of Tethers' history, with all
| of Bitcoins' ups and downs, there has never been a period in
| which people weren't pulling more money out of the crypto
| ecosystem than other people were putting fresh money in. I
| would expect that to be the case in most of the Bitcoin
| deflation phases.
| csomar wrote:
| Posting this again:
| https://coinmarketcap.com/currencies/tether/
|
| They did redeem from 2.8bn to 1.7bn. Which is like 40% of
| their total value at the time. Is that significant enough?
| Slartie wrote:
| Ah yeah, you got me. Though I don't really count that as
| good evidence for an actual "redemption" since it
| apparently was burning Tethers that came from Bitfinex:
| https://www.coindesk.com/tether-just-burned-500-million-
| usdt...
|
| And since Bitfinex is the owner of Tether Ltd., there is
| unfortunately no outsider that could credibly confirm to
| have actually received any USD in exchange for those burned
| Tethers. Bitfinex might just as well have sold Bitcoins
| from its own stash (or from customer wallets) to others for
| USDT and then burned those USDT in order to stabilize the
| USDT/USD price which wasn't exactly holding up well at that
| time. If they had actually printed more USDT than they have
| USD in the past, this would be a smart move in order to
| distribute the "missing" funds more evenly across multiple
| crypto coins in their custody, which makes it less likely
| for them to run out of one of them and thus makes it less
| likely for the alleged scam to come to light.
| user-the-name wrote:
| > OP gives no proof that Tether is not holding 1:1 reserves.
|
| Other than, you know, they themselves admitting under oath that
| they did not.
| dandanua wrote:
| The proof is that Tether almost never deleted any of its
| tokens, even when Bitcoin dropped significantly, e.g. from $10k
| to $5k in 2020. Does it mean that no one wanted their USD back
| from Tether organization? I highly doubt it.
| csomar wrote:
| They do: https://coinmarketcap.com/currencies/tether/
| paulgb wrote:
| I mostly agree with your skepticism on USDT driving BTC price,
| but I disagree with this:
|
| > There is, however, a good proof that they do: Tether has held
| the 1:1 beg pretty well recently.
|
| All this proves is that they have _something_ in reserve, not
| that it is 1:1 backed. Most modern banking operates on a
| fractional reserve system, but when I take cash out of my bank
| account I get a cash dollar 1:1 with what they debit my
| account; they don't prorate it for the amount of reserve they
| have.
| csomar wrote:
| That's good for 97% of the time, but not for the 3% where
| prices either crashes or goes way-up (volatility blackswan).
| These stressful situations tests the 1:1 peg. (which is why I
| mentioned the $4000 price crash). They probably have 1. good
| reserves ratios and 2. very liquid assets as reserve.
| paulgb wrote:
| The difference between having 1:1 backing and "pretty good"
| reserves is that if they claim (as they do) to be 1:1
| backed and it were to come out that they were not, it could
| spark a "run on the bank" type scenario for everyone to get
| their money out while they can.
| csomar wrote:
| It's not like it didn't happen before (it happened
| twice), and their rate diverged from the 1:1. Actually,
| their rate wasn't that super stable until very recently.
| The reason why I think they are fully backed is that the
| crypto-market yield for USD in the last few years have
| been crazy. So unless you are planning an exit scam, you
| can't go broke. Even if they are losing money to move the
| money, or they screw up here or there (get accounts
| blocked), they can still come on top.
| jVinc wrote:
| Lets pretend Tether has no backing what so ever. They could
| still defend the peg 1:1 completely. How? Well if someone
| wants to sell a bunch of tether, they simply print even
| more tether, use that to buy crypto on exchanges, and sell
| that crypto to anyone willing to buy it that generates
| dollars to pay of the person selling their tether. But that
| also leves them with the tether that was sold back to
| dollars, which they can then buy more crypto with an either
| just hold or also sell to generate dollars. The visuals of
| this from an outside ends up looking effectively like there
| was just ton more new money coming into the system when in
| fact the exchanges and new money took a hit, and the money
| printing people just raised their perceived holding without
| backing. That is to say, that in this case the event of
| someone wanting out looks like the market is rising. You
| can keep this going as long as your un-backed coin can be
| exchanged for other liquid crypto.
|
| As long as they have a blindly trusted money money printing
| machine, they can use it to defend the illusion that it's
| printing real money. This is thes standard playbook for a
| pyramid scheme. You use new money to keep the illusion of a
| big holding and you can keep that going as long as the
| illusion holds.
| sekai wrote:
| > but when I take cash out of my bank account I get a cash
| dollar 1:1 with what they debit my account; they don't
| prorate it for the amount of reserve they have.
|
| Now try taking out 50 million or more, you'll face same
| difficulties.
|
| This tether nonsense comes up every few months, still
| adamantly holding the 1:1.
|
| Not mentioning that it's not the single dollar peg option in
| crypto space anymore, plenty of other options USDC, Dai.
| paulgb wrote:
| > Now try taking out 50 million or more, you'll face same
| difficulties.
|
| Sure but that's my point. The fact that my small volume
| transactions go through without friction is not proof that
| the system is not fractional reserve. In the case of a
| (properly run) bank the value still exists but isn't
| liquid; in the case of USDT we don't know without an audit.
| qeternity wrote:
| > It is important to mention that USDT is still liquid despite
| the lack of USD on/off-ramps.
|
| USDT is only liquid _BECAUSE_ there is no redemption mechanism
| (or at least not one that has ever been demonstrated). If
| Tether came and said "sure we'll redeem these fully backed
| Tethers for USD 24/7/365" you would quickly find yourself with
| a liquidity crisis.
| csomar wrote:
| People can sell USDT for crypto, USDC or offline. If Tether
| didn't have good reserves, the price will diverge from 1:1.
| qeternity wrote:
| No, instead of just stating it, explain to me.
|
| Tether's reserves only matter when people try to redeem
| Tethers. This is currently not possible.
|
| So it is purely a trust game right now, and everyone has an
| incentive to trust (or turn a blind eye) that Tether is
| playing by the rules.
| csomar wrote:
| > Tether's reserves only matter when people try to redeem
| Tethers. This is currently not possible.
|
| This is why being liquid and freely trade-able matters.
| Tether is fully redeemable if you can trade it against
| other crypto/stable coins. Want to redeem USDT? exchange
| it to USDC and then withdraw to your bank account.
| qeternity wrote:
| No, trading is not redeeming. The fact that you will buy
| it from me or swap me USDC does not prove that they have
| any reserves.
|
| So again I ask - how do we have any proof that Tether has
| the reserves they claim they do?
| csomar wrote:
| Somebody will need to take the counter-trade (the
| arbitrage dude) and unless he can redeem to close the
| circle, he is going to stop.
|
| USDT are redeemable to your bank account if you have a
| good sizable balance (talking 7-8 figures). You'll get it
| deposited from some of their offshore shell companies.
| But you didn't hear it from me :)
| qeternity wrote:
| No, they don't. There doesn't need to be an arbitrage. If
| you have 10 USDT and I give you 9.90 USD for
| that...nothing else needs to happen.
|
| But the degree that this is happening pales massively in
| comparison to the billions that are sat on exchanges and
| recycled.
|
| Tether would be the first legitimate billion dollar
| operation where people have to say things like "but you
| didn't hear it from me".
| jrh206 wrote:
| > No, they don't. There doesn't need to be an arbitrage.
| If you have 10 USDT and I give you 9.90 USD for
| that...nothing else needs to happen.
|
| I'm not an expert, so I might be wrong (seriously, not
| sarcastically). I _think_ this is technically arbitrage
| even though you never complete the loop.
| qeternity wrote:
| I'm a hedge fund trader. It's not an arbitrage. It's the
| furthest thing from an arbitrage.
| gruez wrote:
| >USDT is only liquid BECAUSE there is no redemption mechanism
| (or at least not one that has ever been demonstrated).
|
| For the bystanders here, I've made a reply to a comment
| similar to this in sibling thread:
| https://news.ycombinator.com/item?id=25686965
| rednerrus wrote:
| If there is a USD to USDT match, where are the audits?
| gruez wrote:
| Is that relevant? I'm not arguing against the claims that
| tether is shady, I'm only arguing against the outrageous
| claims that you can't convert USDT back to USD that some
| tether opponents claim.
| jVinc wrote:
| Well ofcause you can. A pyramid scheme keeps paying out
| profits to the chumps right up to the point when it
| doesn't.
|
| The argument here isn't that Tether has no cash on hand,
| it's that if enough people pull out, they hit the the
| bottom of the non 1:1 reserve and everyone else left
| holding will zero out. If you have 1 kg of gold and start
| selling papers giving people claim to that 1kg of gold,
| nothing will prevent you from seeling 1000 claims, making
| it seem like you're holding a ton of gold for people when
| looking at the market cap, but if 2 people come and ask
| you for their 1kg of gold and you don't have enough of
| the cash you got seeling claims on hand and an oppotunity
| to buy gold quickly, then from one day to the next 999
| claims are worthless.
|
| This is of cause not a big risk in the industry normally
| because markets are regulated and those who hold gold or
| other assets backing claims go through audits.
|
| Naturally Tether can't go through an honest audit because
| even though they might be holding enough cash to cover a
| decent amount of the market, it would expose them for
| lying over time, which would still hurt their business
| tremendously.
| nebulous1 wrote:
| > USDT is only liquid BECAUSE there is no redemption
| mechanism
|
| This isn't necessarily true, as in that event, although
| possible, wouldn't necessarily have happened. Much like banks
| with limited liquidity can survive for a long time. To your
| point, it's confusing how they managed to thrive after
| admitting that they were lying about being backed 1:1.
|
| Edit: I haven't been paying too much attention to tether in
| ages. It looks like they're now offering redemption of $100k+
| at a minimum of $1000 a pop?
| FireBeyond wrote:
| > OP gives no proof that Tether is not holding 1:1 reserves.
|
| I'm fairly certain that _Tether's_ lawyer said, in court, that
| their reserves were closer to 0.74.
| safog wrote:
| There's a lot of bots doing arbitrage between exchanges though.
| If one diverges significantly from the other, the bots will eat
| up the difference, I don't think you can make any claims about
| where the demand is coming from based on this?
| csomar wrote:
| Bots will arbitrage up to the transaction costs. (the price
| is not worth arbing if it is a small difference). Some
| exchanges, sometimes, lead the price and this can be visible
| if you are actively trading (you'll notice that the arb bots
| are selling in one exchange and buying in the other, aka:
| bearish exchange trailing the market).
| tomtomtom777 wrote:
| I still don't quite understand how they can manipulate the price.
|
| The price of a USDT is 1 dollar. They give out new USDT for $1 a
| piece.
|
| Sure, they may be spending these dollars elsewhere, thus holding
| a fractional reserve. Sure this may illegal and get them in
| trouble.
|
| But this doesn't effect the dollar value for which these USDT's
| and thus Bitcoins are traded.
|
| As long as a USDT is $1, nobody is manipulating the price.
| Cthulhu_ wrote:
| Not the Tether price, but that's not what the article is about;
| the article is that they print USDT and use it to buy BTC,
| increasing demand and causing the BTC price to go up. No
| dollars involved, not directly.
| NovemberWhiskey wrote:
| > _The price of a USDT is 1 dollar. They give out new USDT for
| $1 a piece._
|
| If this were the case, Tether would be back by cash. But it
| isn't: they claim it's backed by cash, cash-equivalents and
| receivables from loans, including loans to affiliated entities
| (or some similar language).
|
| So, for example: they could create 1M USDT and immediately loan
| it to their associated crypto-hedge-fund (for zero interest).
| The hedge-fund promises to repay that loan in USD (creating
| 'reserves' for USDT), and immediately places buy orders for
| Bitcoin; generating demand for Bitcoin that will raise the
| price.
| PragmaticPulp wrote:
| Scams always work on the way up. Madoff operated a Ponzi scheme
| for 17 years before running out of money. He simply used his
| bank account to pay off anyone who wanted to withdraw. As long
| as more total money flows in than flows out of the system, it
| doesn't fall apart.
|
| The entire narrative around BTC is "HODL", and the only thing
| people really do with it is buy and hold. Money is flowing into
| the system, so there's room for scams to operate undetected
| within those margins.
| 3np wrote:
| Well, what if you use those reserves to buy bitcoin on your own
| exchange?
| danivaz wrote:
| The author is saying there are more tokens in circulation than
| dollars in their reserve.
| jaggirs wrote:
| They print additional usdt, that are not backed by dollars, and
| buy bitcoin with them.
| csomar wrote:
| > I still don't quite understand how they can manipulate the
| price.
|
| They largely can't (especially that a good fraction of Bitcoin
| is now held by institutional investors). But it makes up for a
| good story.
| julianlam wrote:
| > The price of a USDT is 1 dollar. They give out new USDT for
| $1 a piece.
|
| That's circular logic isn't it? USDT is $1 USD and $1 USD is 1
| USDT, therefore it is "stable".
|
| That sentence in and of itself is meaningless.
| seibelj wrote:
| Permabears' final hope is that tether is a scam, because if that
| fails they have nothing to grasp onto to explain bitcoin's rise
| other than legitimate demand.
| dgellow wrote:
| Let's say you believe that Tether is a complete fraud and will
| crash the market at some point. How do you take advantage of
| this? I'm not myself trading, but I would be interested to know
| how that kind of short works in practice. From what I understand,
| that's what bitcoin futures can be used for?
| grapehut wrote:
| kraken supports shorting tether against USD
| graeme wrote:
| Cboe ended their bitcoin futures. As such there's no way to bet
| on a bitcoin collapse that I know of, in a less risky options-
| like way.
|
| Shorts (if they exist) would be extremely risky, as you owe
| more if bitcoin rises.
| hndudette2 wrote:
| There's many bitcoin derivative exchanges which allow you to
| short, in addition to the CME's contract.
|
| Bitmex, Huobi, etc.
| otherjason wrote:
| CME Group still offers Bitcoin futures, along with options:
| https://www.cmegroup.com/trading/bitcoin-futures.html
| graeme wrote:
| Oh thanks. Where can you trade those? Couldn't find them on
| questrade.
| csomar wrote:
| The minimum for CME is 5 bitcoins ($200k). So I guess
| they are for the big dudes?
| cdiddy2 wrote:
| CME has fairly liquid futures
|
| https://www.theblockcrypto.com/data/crypto-
| markets/futures/a...
| sharperguy wrote:
| Surely the only way to keep the valuer of tether stable is to
| "print" more of it whenever its value starts to increase?
| Otherwise it wouldn't be always worth $1.
| Triv888 wrote:
| They would have to destroy some too at some point otherwise the
| price would go down? Do they do that?
| xur17 wrote:
| That or provide on and off ramps that users can use to
| arbitrage any deviations from a value of $1.
| qeternity wrote:
| Which they cannot do because 1) they don't have any banking
| and 2) they cannot allow redemptions which would risk a run
| on their reserves (to the degree those exist at all).
| olalonde wrote:
| Except they do allow redemptions:
| https://app.tether.to/app/signup
| qeternity wrote:
| Not sure if trolling but why would Tether ever be worth more
| than $1? Printing USDT is not the same is issuing new fully
| backed USDT.
| callamdelaney wrote:
| Tethers only value is as a proxy for the dollar, as such it can
| only ever be worth a dollar. The exceptions are when a market
| is crashing people would rather have dollars, and we will see
| prices above a dollar due to high demand - though the intrinsic
| value should never change.
| alisonkisk wrote:
| When market crashes Tether prices go _below_ a dollar because
| dollars get (relatively) expensive.
| ackbar03 wrote:
| Wait I don't get it, it's not fully backed but it's still backed
| somewhat right? I thought it was only a chunk of USD that was
| missing? Or did they completely abandon the usd backing?
|
| If it's still somewhat backed and just that chunk of usd that
| remains unaccounted for, printing tether isn't exactly a scam?
| People trade their usd for printed tethers and use that to buy
| bitcoin, so it's still essentially people exchanging usd for
| bitcoin
| raesene9 wrote:
| no-one knows how backed it is. iFinex claim it's 100% backed.
| They may, or may not, be telling the truth.
|
| The question is do you believe that billions of dollars are
| flowing into an unaudited stablecoin when other, audited,
| stablecoins exist...
| dgellow wrote:
| In 2019 Tether's lawyer was talking about 74% backed by cash
| and "short-term securities".
|
| Edit: I forgot to add the link, here it is
| https://www.bloomberg.com/news/articles/2019-04-30/tether-
| sa...
| technics256 wrote:
| Can anyone recommend a business bank replacement for Azlo, which
| is also shutting down?
| dtelepathy wrote:
| I'm planning on giving BlueVine a try:
| https://www.bluevine.com/checking/
|
| Relay looks interesting too: https://relayfi.com/business-
| banking
| EVa5I7bHFq9mnYK wrote:
| This is a qanon-style conspiracy theory going on for years now.
| Just follow the money: tethers are freely traded vs USD on
| multiple markets, including anonymous exchanges. If the
| conspiracy theory were right, the price of 1 Tether would be less
| than 1 USD. Meanwhile, it's very close to 1.00 USD on all the
| exchanges.
| Speednet wrote:
| What a ridiculous Twitter thread showing absolutely no causality
| between Tether and Bitcoin. You might as well show that SpaceX
| rocket launches coincide with a rise in Bitcoin prices.
|
| There was a successful SpaceX launch yesterday, and Bitcoin went
| over $40,000 for the first time. In 2020, SpaceX had its best
| year ever for successful launches and returns of the first stage,
| perfectly coinciding with Bitcoin's meteoric rise in value. So
| Bitcoin must be tied to successful SpaceX launches.
| SNetForLife13 wrote:
| Upvote this gentleman for being the final trinity-piece in this
| mystery! HN-user Speednet is 1/3 rd of bitcoin's success!
| Speednet wrote:
| I can see I've been downvoted. I must have made a mistake.
| Bitcoin prices are actually tied to Elon Musk's rising
| wealth, not SpaceX launches.
| mmastrac wrote:
| Bernie Madoff ran the same alleged scam for years, including
| giving interest to people in the fund. It would be even easier to
| run with a non-interest-bearing fund and you'd never even notice
| the money was missing unless there was a bank run.
| pearjuice wrote:
| I'm no expert but wouldn't it make sense that Tether has to mint
| new USDT pegged to the price of BTC? If BTC price increases,
| regardless of what reason, the next buyer has to somehow have
| more USDT than there previously was in the system.
|
| - B buys 1USDT for 1USD
|
| - BTC sale at 1USDT from A to B
|
| - person B now lists their BTC for 3USDT
|
| - if person C now wants to buy this BTC for 3 USD, there has to
| be an additional 3 USDT minted
|
| Given new influx of money keeps happening to buy BTC, more and
| more USDT needs to be printed. Meaning, extra USDT is printed
| BEFORE the price increases. Because it's required to buy. Doesn't
| explain why it's seldom burned. Nobody ever cashes out?
| NovemberWhiskey wrote:
| There is one question to ask here: "Why is so much of the volume
| in BTC driven by USDT trades?", i.e. what exactly is so great
| about Tether that we're supposed to believe everyone is actually
| buying it?
|
| It is supposed to be a stablecoin. That's meant to be exceedingly
| boring. Tether is anything but boring, with all kinds of
| intrigue, lack of transparency about its reserves, law suits and
| so on.
|
| There are a bunch of other stablecoins out there that just seem
| like better propositions, so why does crypto price action
| continue to be primarily driven by inflows from Tether?
| nathansmith2017 wrote:
| So, lets assume this is price manipulation is true. If they print
| tether, and buy BTC/USDT on an exchange than someone else has to
| go long the other side (USDT/BTC). When 600 mil of USDT was
| printed and was used to purchase 600 mil of BTC/USDT, then who
| purchased 600 mil USDT/BTC.
|
| It doesn't make sense that people who want to cash out of BTC at
| a certain price level will cash out through USDT because there is
| no exchange to redeem USDT to USD directly. You have to cash out
| through USD/BTC or USD/ETH.
|
| There are arbs traders who maintain the peg the USD/USDT, but
| arbs traders will always attempt to have a net 0 position, it
| doesn't make sense for them to hold tether either. Defi flash
| loans like AAVE and byz offer 0 collateral loans. If they are not
| using flash loans, then they will post collateral with USD (as
| this is presumably how they want profits) to short whatever
| ticker they need to short for the arb play.
|
| If bitfinex and tether keep printing tether, someone is holding
| all this tether. A lot of this is probably held in defi liquidity
| pools and AMM pools, but the total reserves in these exchanges
| (Compound, curve, dydx...) is far less than the 600 million
| printed.
|
| Perhaps the same institutions printing are the last holders, but
| Why would tether and bifinex hold their tether if it is truly a
| scam? I am confused as to who the last holders of tether are, if
| people are swapping tether for BTC and BTC for USD. Most people
| that buy tether (other than people supplying liquidity pools) do
| so to swap to another token for a real potential of gains, since
| Tether will never gain in value significantly with a 1:1 peg.
| thom wrote:
| Even if Tether is a scam, it still seems like the market for
| Bitcoin scams is infinite, so I'm not sure how much difference it
| makes.
| xur17 wrote:
| The graphs show a strong correlation between printing of USDT and
| the Bitcoin price rising, but it's not clear to me which one
| triggers the other.
|
| Interestingly, USDC seems to follow similar minting patterns, and
| they post quarterly audits of their books / are much better
| regulated.
| raesene9 wrote:
| They are better regulated and therefore less risky than Tether,
| which raises the interesting question, Why is USDC circulation
| only 20% of Tethers...
| leppr wrote:
| Have you considered the fact that "better regulated" might
| not be an advantage for someone using it as a capital flight
| tool? A big value proposition of Tether as an on-ramp is its
| discretion.
| raesene9 wrote:
| Abolutely I have, I also think that regulators in places
| like the USA are very likely to crack down on any company
| providing that kind of service :)
|
| The most likely threat to Tether as a currency (IMO), is
| that one or more large countries outlaws its use, and/or
| decides to prosecute its owners...
| leppr wrote:
| Don't put too much hope on that. The only country that
| would realistically single Tether out to "outlaw" it
| would be the US. They may do so, but even then they won't
| be able to stop the redeeming process from taking place
| abroad. That may mark the beginning of a slow decent, but
| no threat to current holders of the token IMO.
| pawelduda wrote:
| Could be a first-mover advantage for Tether and the fact that
| there haven't really been alternatives for a long time. Even
| if there are now, people are slow to catch on...
| [deleted]
| csomar wrote:
| > They are better regulated
|
| You just answered your own question.
| xur17 wrote:
| I agree, and it does surprise me, but I think it's a mix of
| 1. tether has been around a lot longer and is on a lot more
| exchanges 2. tether is.. less well controlled by US
| regulators and hence better for.. questionable exchanges to
| list.
| raesene9 wrote:
| Challenge there is that it doesn't fit the narrative that
| Tether give about the demand being from "institutional
| investors". That kind of customer tends (IMO) to be very
| risk averse.
|
| Of course it is possible that Tether are getting custom,
| but not the kind that wants to leave a bank trail. But if
| that's the case they're going to fall foul of the
| regulators sooner or later...
| raziel2p wrote:
| Almost as if crypto is mostly about investment speculation
| and gambling, and not so much about actually useful assets.
| grapehut wrote:
| Might be good to get patio11's take on this. He's predicted the
| last 5 tether collapses.
| lai-yin wrote:
| Anyone know the source of Jacob's chart in part 5 of his thread?
| WMX123 wrote:
| Not true since coinbase doesn't accept tether. so, how do you
| explain bitcoin's rise on coinbase exchange without tether??
| sneak wrote:
| One thing the author and I agree on:
|
| When Tether falls, it's going to make a very big noise.
| jpmattia wrote:
| The twitter thread is utterly fatuous, and another post this
| morning on reddit laid it out pretty well:
|
| > _This is just dumb but I 'll lay it out anyway: The NY AG
| issued the first Tether subpoena in Dec 2017. The AG got the
| financial info, found that tether was fully backed by dollars,
| and that the Tether company lent some of those dollars to the
| Bitfinex company, which is the basis of the NY AG lawsuit.
| Bitfinex has since issued tokens to cover the loan.
|
| To say that the NY AG got the subpoena info (which would require
| more evidence than an audit and be under penalties of perjury as
| well) found no backing and let them continue a ponzi is to say
| that the NY AG is part of the conspiracy. So enough with the tin
| foil hattery._
|
| https://www.reddit.com/r/BitcoinMarkets/comments/ksvlc3/dail...
| Slikey wrote:
| > Dec 2017
|
| I am fairly certain over 3 years passed since then.
| jpmattia wrote:
| Yes, I think that was their point: To suggest that the NYAG
| got the financial info and has waited more than 3 years to
| shut down an unbacked ponzi scheme is just tinfoil-hattery.
| oxygenjoe wrote:
| Or perhaps USDT is created as BTC price increases to ensure
| exchange liquidity of USDT, allowing it to to stay very close to
| $1
| Cthulhu_ wrote:
| The net effect is the same though; the company behind Tether is
| printing money from nothing and selling it for USD or BTC
| (which can be sold for USD more reliably).
| WMX123 wrote:
| To people who think Tether manipulates Bitcoin price: How do you
| explain Bitcoin doing so well on Coinbase when Tether is NOT
| ACCEPTED on Coinbase???
| MystK wrote:
| If BTC's price is manipulated anywhere, the market adjusts for
| it everywhere.
| WMX123 wrote:
| That makes no sense. Again, how can someone manipulate
| Bitcoin on Coinbase with Tether when Tether is NOT accepted?
| lippel82 wrote:
| It does make sense. The price of BTC in USD is roughly the
| same on every exchange. If some exchanges allow USD and
| USDT interchangeably, the BTC price can be driven up by
| trades that are conducted in USDT. The price on Coinbase
| will adapt to that.
| WMX123 wrote:
| how will Coinbase "adapt"? it's a walled garden.
| xenihn wrote:
| Scenario:
|
| Eth is $400 on Coinbase, Bitcoin is $12000 on Coinbase
|
| Print 1,000,000 Tether
|
| Buy $1,000,000 of Eth on an exchange that supports Tether
|
| Sell $1,000,000 of Eth on Coinbase
|
| Buy $900,000 (arbitrary post-sale amount from selling Eth)
| of Bitcoin on Coinbase
|
| Another scenario:
|
| Bitcoin is $12000 on Coinbase
|
| Bitcoin is $12000 on another exchange that supports Tether
|
| Print 1,000,000 Tether
|
| Buy $1,000,000 of Bitcoin on the exchange that supports
| Tether
|
| Bitcoin is now $12050 on another exchange
|
| Coinbase price of BTC rises as arbitrage bots and manual
| traders purchase cheaper Bitcoin on Coinbase and sell it
| for profit on the other exchange until prices equalize
| WMX123 wrote:
| I still don't see that artificially inflating coinbase
| bitcoin. plus only bitfinance would be able to
| print/create tether. also, there's no evidence that
| companies what you claim they could do.
| xenihn wrote:
| >I still don't see that artificially inflating coinbase
| bitcoin.
|
| I don't know how to explain it any more clearly to you.
|
| >plus only bitfinance would be able to print/create
| tether
|
| Yes, but whoever controls the printing could then use the
| Tethers on any exchange that supports them.
|
| >also, there's no evidence that companies what you claim
| they could do
|
| You asked for an explanation of how it could be done, not
| evidence.
| orthecreedence wrote:
| I mean...arbitrage? Isn't that obvious?
| dsr_ wrote:
| While correlation is not causation, correlation is evidence for
| causation... and there's a lot of correlation in those graphs.
| tomwojcik wrote:
| It literally is not.
| wegs wrote:
| Correction: Correlation is evidence for causation. It's weak
| evidence, and generally speaking, stronger correlation isn't
| more evidence.
|
| There's a gradual process to go from hypothesis to theory to
| fact, and to get there, you need several types of independent
| evidence. Correlational evidence is okay as one of those.
|
| A correct statement is that correlation is not proof of
| causation (no matter how strong).
|
| Types of evidence:
|
| * Correlation
|
| * Theoretical basis / strong hypothesis
|
| * Extrapolation
|
| * Interpolation
|
| * Small-scale well-controlled experiments (lab setting)
|
| * Large-scale less controlled experiments (real-world
| setting)
|
| * Anecdotes
|
| * ... and so on
|
| You want several of those before you start to believe
| anything, and some are stronger than others. Correlation
| isn't fundamentally weaker than most of those, though; all of
| those carry their own methodological issues. The number of
| times you can have a large-scale perfectly-controlled
| preregistered randomized control trial with no confounding
| effects is exceptionally rare (some medical trials, and a few
| other settings).
| benibela wrote:
| But it is
|
| There are several algorithms that calculate the causal
| structure from correlations: PC, GES, FGS, FCI
|
| They are proven to be asymptotically correct
| arvindamirtaa wrote:
| >"...correlation is evidence for causation"
|
| Yeah...that's not how it works.
| arvindamirtaa wrote:
| Causation may be evidence for correlation. But the reverse is
| simply not true.
| kilnr wrote:
| I assume you've conflated evidence and proof?
| jwalton wrote:
| Correlation is definitely not evidence for causation. Also, if
| you reverse the cause and effect, what analysis do you get?
| When BTC prices are in the rise, it's because people are
| putting money into crypto currencies. When people are putting
| money into crypto, some of that money is probably going into
| tether, so there's more demand for tether, so Bitfinex
| increases the supply. With this reasoning, we get exactly the
| same graph with a totally different meaning.
| callamdelaney wrote:
| > Correlation is definitely not evidence for causation.
|
| Try telling this to climate change activists
| tether--fork wrote:
| Why hasn't anyone forked tether?
|
| A tether fork call it 'tether2' can be 'backed by tether', with
| the same legal setup (wyoming msb state license according to
| fincen, which isn't real since wyoming exempts them). The issuer
| of tether2 would accept 1 tether for one new tether2. This issuer
| would immediately sell tether to get real dollars on an exchange
| like Kraken while liquidity exists - usdt/usd pair, which is the
| only real way to redeem tether, unless you directly deal with
| tether(which mean you better be located in wyoming). When
| redeeming the tether2 ppl can either get back tether or
| optionally 1 real us dollar. So you effectively have front run
| the inevitable tether bank run. Sure they have to put trust in
| this new tether fork. You can steal tether's customers that are
| worried and since the feds seem to have a blind eye towards a
| company that isn't a bank and is most likely practicing
| fractional reserve lending, you let the free market 'regulate'
| tether. since you can always buy tether for a us dollar, but you
| may not be able to sell tether for a dollar there is no risk of
| selling tethers for real dollars.
|
| Also what happened to the tether issued on bitcoin cash
| blockchain through omni after the fork of bitcoin?
| DJBunnies wrote:
| This is propaganda from a competing altcoin.
| diggan wrote:
| Just like "Jacob Oracle" did on Twitter, you're gonna have to
| provide at least some proof of your accusation. Now this is not
| conclusive in any way, but the user has "Investing in #Bitcoin"
| listed in their Twitter biography, hinting that they have more
| to lose if Bitcoin loses it's price, rather than gain, so seems
| they don't have anything but fairness to win with this. But
| wouldn't be the first time someone lied on the internet.
|
| Point still stands, proof or GTFO.
| danivaz wrote:
| Where is the proof of whether or not Tether was actually
| injecting unbacked tokens? The tweet author just assumed
| bitcoin spikes were being pumped by Tether, basically they
| got the graph and put lines on it. Do you call that proof?
| diggan wrote:
| I don't have any inclination towards the tweets author
| being right or wrong, I simply know too little about it.
| But at least they are providing something to try to back up
| their claim. If it's true or not will ultimately be up to
| law enforcement, if it comes to that.
|
| My point was that the tweets author is trying to back up
| their claim while DJBunnies did absolutely nothing to try
| to back up theirs.
| emteycz wrote:
| Indeed, show the proof of manipulation or GTFO
| chrisa wrote:
| I agree that a Tether reckoning is coming, but point #10 of that
| thread is the most important: it could be weeks, months or
| _years_ before it's fully corrected, so be super super super
| careful about using Tether as a reason to short Bitcoin...
|
| "The market can remain irrational longer than you can remain
| solvent"
| qeternity wrote:
| It's even worse than that. Shorting TSLA is dangerous because
| of the above. But it's mitigated by people purchasing shares
| with real fiat. They have a natural incentive to not be absurd:
| whether or not $800/share is absurd is a matter of
| opinion...but everyone would agree that $1m/share is absurd.
|
| Tether has no such limitation. All the exchanges are complicit
| in this, wash trading is rampant, and there's an de facto
| central bank run by actual criminals. There is absolutely zero
| reason why iFinex can't take bitcoin to $100k or $1m or
| whatever they like. They only have opportunity costs.
|
| The only thing keeping them in check right now is the
| appearance of legitimacy. If they were to overdo it, people
| might actually sell, which is not what they want. So until
| their legitimacy is tested (Jan 15) they will probably
| responsibly grind this higher. But on the last day, I expect
| billions and billions of USDT issuance so that they can run
| stops on every short in the market, collecting their last few
| shekels before the music stops and they vanish to an island
| somewhere.
| dgellow wrote:
| If they provide documents January 15th, I would expect at
| least a few weeks before we get some information. That will
| be interesting to follow.
| chrisa wrote:
| Do you know if the public will actually find out any info on
| Jan 15th, or will that all be private, sealed documents? (I'm
| a bit lost at how that process is going to work)
| qeternity wrote:
| IANAL and don't have any real understanding of this
| process.
| graeme wrote:
| Wait what's the January 15th date?
| raesene9 wrote:
| Jan 15 is the next court date where apparently iFinex will
| have provided all the required documents to the NYAG.
|
| If the NYAG doesn't like what's in there I guess it may go
| badly.
|
| The courts document list is https://iapps.courts.state.ny.u
| s/nyscef/DocumentList?docketI...
|
| If you look at the latest one, it mentions the 15th.
| michaelchisari wrote:
| _Bitfinex and Tether have till the 15th of January to
| submit documents to the New York state attorney general
| about their financial relationship. The shortfall of $850m
| was allegedly printed by Tether and given to Bitfinex to
| cover up the losses Crypto Capital created. It is
| speculated Bitfinex and Tether can 't submit any documents
| without revealing their cover-up. This will result in the
| conclusion that Tether isn't backed 1:1 by USD by a lot of
| investors and will results in more investigation by the
| attorney general. Tether is unaudited at the moment,
| meaning no one checked the bankroll of Tether if there
| really is $23b USD there._
|
| https://www.reddit.com/r/CryptoCurrency/comments/ksdfne/why
| _...
| ahelwer wrote:
| The thing is $850m isn't actually that much money. The
| big exchanges made on the order of several billion
| dollars profit during the last bubble; presumably they
| are also making that much in this one.
| michaelchisari wrote:
| It's not about the $850m per se, it's about the deep
| suspicion that Tether does not have anywhere near the
| _$23 billion_ in reserves they claim to.
| WA wrote:
| Sounds like Wirecard and they went down 90% in a week and
| 99% in total within two weeks. Popcorn time.
| dandanua wrote:
| Tether has printed almost double of its amount just BEFORE
| Bitcoin price jump. It's the biggest pump and dump scheme ever,
| made by organized crypto-mafia. I doubt this will continue for
| long.
| tether-fork wrote:
| Why hasn't anyone forked tether? What happened to the tether
| issued on bitcoin cash blockchain through omni after the fork of
| bitcoin?
|
| A tether fork can be 'backed by tether.' The issuer of forked
| tether would accept 1 tether for one new tether fork. this issuer
| immediately sells tether to get the risk off their books through
| an exchange while liquidity exists. When redeeming the tether
| fork ppl can either get back tether or ~ 1 us dollar. So you
| effectively have front running the inevitable tether bank run.
| Sure they have to put trust in this new tether fork. You can
| steal tether's customers that are worried and since the feds seem
| to have a blind eye towards a company that isn't a bank and is
| most likely practicing fractional reserve lending, you let the
| free market 'regulate' tether.
| Cthulhu_ wrote:
| I'm kinda glad BTC is up, this means I can do an exit with break
| even or a little profit. I just sold half my crypto assets on the
| two exchanges I have an account on, I just hope I can have the
| money transferred out before they become insolvent when the next
| great crash happens.
| Tepix wrote:
| Good for you, parts of mine are stuck on CoinBase and the
| support isn't answering for days. Seems i'm not alone with that
| issue.
| Triv888 wrote:
| I was finally able to login into Coinbase and do what I
| wanted to do.
| kneel wrote:
| This narrative has been dead for years.
| coinward wrote:
| How about USD price manipulation? How much of the USD being
| created by the FED is back by their reserves?... Is this scam
| sustainable? What effect would a Fed collapse have on Bitcoin's
| price? I'm going to wager that the Fed scam has a far larger
| impact on the USD price of BTC than this article's claims on
| tether fraud or collapse and its not even close.
| wskinner wrote:
| When the Bitfinex'd posts came out in 2017, I found them fairly
| convincing. It seems likely there is something not quite right at
| Bitfinex and Tether. But I have yet to see any evidence that the
| scale of "not right" is so large as is frequently claimed. These
| critiques never seem to address the most parsimonious explanation
| for periods of increased Tether issuance, which is that they are
| driven by genuine demand for bitcoin, and much of that demand is
| routed via Tether.
|
| There is ample evidence of the sketchiness of the people behind
| Bitfinex. But there is also a simple explanation for the behavior
| of bitcoin and Tether in 202 that involves no conspiracies. Many
| hodlers bought during the March crash because they saw it as an
| opportunity to buy at a discount (I am one of these people). The
| crash coincided with events that should drive up the price of
| bitcoin over the longer term. Specifically, the creation of
| trillions of new dollars and what many saw as a new era of much
| looser monetary and fiscal policy. The idea that demand for hard
| currencies is increased is totally consistent with this.
|
| Compared to 2017, I now believe there is a smaller chance of
| total tether insolvency and a larger chance of significant but
| not catastrophic shenanigans.
| PragmaticPulp wrote:
| > These critiques never seem to address the most parsimonious
| explanation for periods of increased Tether issuance, which is
| that they are driven by genuine demand for bitcoin, and much of
| that demand is routed via Tether
|
| The bigger question is: Why are so many institutions using
| Tether to purchase 7-8 figures of bitcoin at a time instead of
| simply engaging with any of the well-known institutions who
| will facilitate the purchase directly? What do all of these
| buyers possibly gain by using an intermediary currency and
| funneling all of their money through the Tether company first?
|
| The only explanation I can come up with is that Tether is being
| used to skirt financial regulations or launder money, which
| doesn't bode well for Tether either.
| wskinner wrote:
| > The only explanation I can come up with is that Tether is
| being used to skirt financial regulations or launder money,
| which doesn't bode well for Tether either.
|
| This may well be true. But it also seems to be the case that
| for a long time, Tether was the only game in town, and
| institutions built integrations around it. Someone starting
| out now might not build on Tether.
| janaagaard wrote:
| > The only explanation I can come up with is that Tether is
| being used to skirt financial regulations or launder money,
| which doesn't bode well for Tether either.
|
| Could it not be possible that cryptocoins has become a
| massive world wide gambling area? People betting on the
| prices going up or down, moving their assets between floating
| cryptos and Tether.
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