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There's weird stuff going on with Tethers, which are supposedly pegged to the dollar and fully backed, being created apparently out of nothing when Tether has n

There's weird stuff going on with Tethers, which are supposedly pegged to the dollar and fully backed, being created apparently out of nothing when Tether has no US banking arrangements, and these being used to prop up margin trading on Bitfinex. The price then goes up on Bitfinex, then on other exchanges. The upshot is: every time margin gets too deep on Bitfinex, another batch of Tethers is created out of thin air, and the price gets a pump. Bitcoin's recapitulated the history of finance, and now it's got to Quantitative Easing. It's amazingly tangled, I'm trying to put together an explainer blog post, but Bitfinexed has the best coverage of the pieces: https://twitter.com/Bitfinexed https://twitter.com/Bitfinexed https://medium.com/@bitfinexed/ https://medium.com/@bitfinexed/

xg15 9y ago
> ... which are supposedly pegged to the dollar and fully backed, being created apparently out of nothing ... Amateur here, but how is that not a contradiction?
- Khoth 9y ago
  "supposedly fully backed" isn't the same as "actually fully backed". If they are being created out of thin air, it would mean the claim about them being backed by dollars was a lie. Edit: Although, whether or not they're backed by anything isn't really all that relevant, considering that their terms of service[1] say: "There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money. We do not guarantee any right of redemption or exchange of Tethers by us for money." So backed or not, nobody has any obligation to give you dollars in exchange for your tethers. [1] https://tether.to/legal/ https://tether.to/legal/