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Anyone speculating about what's going on with Bitcoin without at least mentioning Tether is out of the loop.
by cantrip 9y ago
Anyone speculating about what's going on with Bitcoin without at least mentioning Tether is out of the loop.
- robbyt 9y agoI'm out of the loop. What's the deal with tether?
- eximius 9y agoIssue Tether (it is issued, not mined), trade Tether for Bitcoin, BTC price in Tethers increases, due to stated and believed peg of Tether to USD, BTC raises in USD price due to arbitrage executioners. More details: https://seekingalpha.com/article/4129543-bitcoin-one-way-go-true#/comment-76992585 https://seekingalpha.com/article/4129543-bitcoin-one-way-go-...
- runeks 9y agoWhich BTC/tether market(s) is this happening on? I know plenty of BTC/USD markets, but I’m not familiar with which BTC/tether markets exist.
- eximius 9y agoBitfinex which is cooincidentally owned by the same people as Tether.
- samsonradu 9y agoFailing to understand how you could peg Tether to the USD and have people believe you. I was under the impression that pegging to a currency is something only a very big player, with close to unlimited resources can achieve, see People's Bank of China, Swiss Bank etc. Among others, you have to defend the currency against speculators and that requires a lot of capital. Even the Bank of England failed to maintain the peg to the German Deutschmark some years ago. Can someone with more knowledge in the FX market area explain this better?
- StavrosK 9y agoYou can peg tether to the usd simply by offering to always exchange one tether for one usd and vice versa, no?
- tehlike 9y agoThe problem is, sonfar they issued north of 800m with no proof of reserves, and no professional audit to support their claims.
- samsonradu 9y agoThat s the thing I don’t get, how do they “issue” tether? Because if one says they peg it to the dollar then it must follow the dollar’s inflation. Otherwise somebody is at a loss because there s more tether value than usd or viceversa, even if they were fully transparent and fair. Edit Unless of course tether is not a store of value in any way and just a fancy name for a dollar.
- tehlike 9y agoThe way it works is, i go to exchange a, and tell them hey i have this cryptocurrency and i have enough cash to back it up. People can withdraw money from me using these. If you do not verify my claims, you think this is a great idea, because now you can transact with usd(t). Formally these exchanges only used cross-coin exchanges. Now this is not a problem as long as you have _enough_ money to support withdrawals on an ongoing basis. Nobody knows you dont have enough cash to support all issued tokens, because seemingly, everything works nicely. With the recent hype, money keeps flowing. Until a mass withdrawal happens.
- samsonradu 9y agoBut why do I want tether in the first place? Why bother switching back and forth at all? I don’t see why would I want to hold tether. Can I buy a can of coke with it directly? What if the coke seller is a bit skeptical of tether and asks for 1.2 tether instead of one usd, just to play safe. Isn t this pressure applied to the exchange rate?
- Kiro 9y agoHow is it issued exactly? Practically and technically speaking. What is the process?
- eximius 9y agoI haven't read the whitepaper. But Ripple and Dash are similarly centralized I believe.
- econner 9y agoTether is supposed to be backed 1:1 by US dollars and function as a non-volatile way to move money across exchanges. It's market cap is ~$815M. Lots of people believe that Bitfinex, the creator of Tether, is not actually holding $815M to back it. Instead they believe Bitfinex is creating Tether out of thin air and could be using it to inflate the price of Bitcoin.
- simooooo 9y agoHow would them issuing tether out of thin air inflate the price of bitcoin?
- fmela 9y agoBy trading tether issued out of thin air for BTC.
- deleted 9y ago[deleted]
- RexetBlell 9y agoWhy would anyone want to exchange their Bitcoins that are worth over $10,000 each on Coinbase (and can be converted to real dollars) for some tokens that are backed by nothing?
- cantrip 9y agoTether are, ostensibly, backed by $1 in a bank somewhere. Having a dollar token is very useful, since you can move in and out of crypto trading positions into a stable store of value, good old USD. Converting to real money takes a long time so you can't react to the market, and is also taxable and often has other fees on top.
- michaelchisari 9y ago> backed by $1 in a bank somewhere. Are we sure about this?
- ComputerGuru 9y agoI would agree except the article wasn’t about any specific cause or even this particular wave; just a general explanation of the bitcoin phenomenon that may even be taken as a general explanation for investment any bubble in general.
- cantrip 9y agoI disagree. There is a section of the article titled "Where is all this cash coming from?" which claims (via a Reddit thread) that it's individuals buying on credit.
- kruhft 9y agoOr older people getting into the crypto game because they're hearing their stock advisers tooting their horns. Some of them have boatloads of assets and will trade a small percentage just to get in the crypto game. No credit required. My friend I helped buy in isn't disappointed. He doesn't fully get what cryptos are yet (although I explain them every time I talk to him), but he sure likes the returns...so far. Edit: filly -> fully
- michaelchisari 9y agoHe doesn't filly get what cryptos are yet That's when you know we're at a dangerous moment in time.
- kristopolous 9y agoIt was because debt-based speculative investing is one of the easiest and most common ways these types of risk are spread. There's lots of other sources of investment, but the debt-based ones are most concerning with respect to the analysis. The other dangers are municipal general fund and endowment based investments. Local municipalities in countries like Greece and Italy got caught up in the 2008 real estate crash and then all of a sudden, things like street sweeping and garbage pickup stopped. Speculative bubbles cast wide nets.
- indubitable 9y agoThe entire market cap of Tether is a small fraction of the daily volume of BTC. If 100% of Tether was traded for BTC, it would just be a blip on a single day's pricing.
- meritt 9y agoI think you're significantly overestimating the total liquidity available at a given point in time.
- indubitable 9y agohttps://blockchain.info/charts/estimated-transaction-volume-usd https://blockchain.info/charts/estimated-transaction-volume-... Daily transactional BTC value has been in the billions for months, even before the recent price explosion. Yesterday's was a [very] record breaking value pushing $6 billion. The total market cap of Tether is less than $0.9 billion. That would've been about a single day's volume back in July. And to clarify, we're talking about if 100% of every single Tether is being used to purchase BTC with these numbers. That assumption is not correct meaning the actual impact is likely substantially lower.
- michaelchisari 9y agoCoinmarketcap has Tether's 24h trading volume at $1.9 billion (over double the market cap). I find that concerning. They list the 24h volume for Bitcoin at $24 billion. At 9% or 10% of the 24h volume, Tether could very possibly be a major factor in the bitcoin price spike.
- meritt 9y ago> Daily transactional BTC value has been in the billions for months That's absolutely true but what you cannot tell is how much actual liquidity exists. I was playing around with algorithmic trading this summer and would routinely have days where my personal transactional volume would exceed $500k and I was only playing with $2.5k. Just a lot of very short duration (sometimes holding for mere seconds) trades and I always took the maker side to avoid paying any fees.
- wc- 9y agoI'll probably be downvoted into oblivion for hating on the latest hot internet rumor, but here is why I believe the tether rumors should be ignored: The tether situation has been twisted into a PR campaign against bitcoin by the bcash supporters (formally the segwit2x) supports. When the segwit2x fork was cancelled, /r/btc (a segwit2x and bcash community) and a number of popular twitter accounts suddenly started picking up the bitfinex'd anti-tether campaign. This includes a large group of what are most likely twitter bot accounts (have not tweeted in a long time, all joined around the same time, etc). Tether/Bitfinex is working on an audit but this takes considerable time. The auditing group will not put their stamp of public approval on an audit until it has gone through the most stringent reviews. Tether has been receiving significant "institutional" money over the past few months specifically trying to exploit the bitfinex USD lending market. Given how Wells Fargo and other large banks have been treating any company related to the bitcoin space, it is not in Tether's best interests to publicize which banks they are using. Hopefully someday this situation will improve, but for now if you run a company in the cryptocurrency space your fiat banking is tenuous at best, therefore you do not advertise your industry to your banking partners. Bitfinex is making $5m or more per day on a slow day, and has been for quite a while. This revenue stream can be used to support Tether if needed. Tether's USD pair on Kraken has remained close to $1. This would be the first market to go crazy if there were an actual issue with Tethers as the tether holders would rush to redeem them at Kraken instead of via Tether themselves. The "printing" of Tethers is now largely being sent to Bittrex and Poloniex in order to support their customers' tether balances. Tethers are a public blockchain, do the research and follow them to their actual destination. Even if every single tether were being used to borrow margin funding on bitfinex and buy bitcoin, it would hardly make a dent in the daily BTC volume at Bitfinex. Tether "followers" make a big deal about a 15m or 30m tether generation event, but even with this being used for 3x margin on bitfinex it would hardly make a dent on the > 2.5B usd trading volume. There are many more arguments supporting or attacking tether. I will not be responding to any comments because I have a feeling this will turn into a mess but I just wanted to throw some more information / opinions into the mix. The whole cryptocurrency world has been completely fueled, almost lives off of, FUD and rumors that would push a price up or down. This feeds right into that. BUT: At the end of the day you should trust no exchange, the entire point of cryptocurrency is that you control your own holdings.