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I'm consistently confused as to who is buying all the tethers in such crazy amounts. It's not like they are appreciating in value. They are sort-of pegged to th

I'm consistently confused as to who is buying all the tethers in such crazy amounts. It's not like they are appreciating in value. They are sort-of pegged to the dollar, but why not just hold the real dollars?

EthanHeilman 9y ago
>why not just hold the real dollars? Some exchanges don't accept fiat, so if you want to trade USD/BTC you settle for USDT/BTC.
- paulgb 9y ago
  Do you know if any of these exchanges are part of the index CME uses?
  - thisisit 9y ago
    Out of the constituent exchanges only Kraken has USDT markets. Though I am not sure if they have difficulties in cashing out USD or not.
Scott_Sanderson 9y ago
No one is buying those tethers. Bitfinex is printing them and using them on their own exchange's margin trading market. They use it to wash trade the price up or down as desired. There is some evidence they have been wash trading down to trigger stop loss sell orders and buying the cheap coins. Then they wash trade up and sell.
- jcoffland 9y ago
  This is pure speculation.
  - coralreef 9y ago
    The relationship between Bitfinex and Tether is real though, executives have positions and board seats in both companies.
- bufferoverflow 9y ago
  That answer doesn't make any sense. Bitfinex is buying bitcoins from itself? Could you please explain in more detail?
  - jonknee 9y ago
    People get upset when you print USD, so Bitfinex instead creates USDT out of thin air and then uses it to buy BTC on its exchange. This would be OK if the Tether was actually backed by USD reserves dollar for dollar, but there is zero evidence that this is the case.
    - bufferoverflow 9y ago
      I understand that, but my question is why would anyone buy USDTs in such quantities? The total is now close to a billion dollars, as far as I understand.
      - jonknee 9y ago
        Exchanges make it cheaper/easier because they're all light on USD and banking/tax rules make all sorts of sketchy characters want to avoid USD. There are also probably a lot of people who don't know any better and think that it's as safe as USD.
    - bduerst 9y ago
      How have they not been sued for this yet? They're advertising monopoly money as being backed by real money.
      - empath75 9y ago
        They actually say on the website that they're not redeemable.
  - ufo 9y ago
    Bitfinex isn't buying Bitcoin from itself. It is buying from customers that use their exchange, using fake money that they are printing out of thin air.
- deleted 9y ago
  [deleted]
jcoffland 9y ago
Tethers are used on exchanges that don't deal in dollars. Traders who want to sell Bitcoin for USD sell them instead for USDT (Tether). Theses are the people who are buying the newly issued Tether. New Tethers are issued so that USDT stays very close to $1. This works great as long as Bitcoin continues to go up relative to the dollar. If/when Bitcoin goes down significantly theses same exchanges would need to buy up Tether to keep the price near $1. But that means the issuers of Tether will have to give up the massive profits they are currently reaping. If they don't the house of cards comes crashing down.
- jonknee 9y ago
  > New Tethers are issued so that USDT stays very close to $1. That's the problem, new Tethers should only be issued when $1 USD is sent to the issuer and deposited in its audited bank account.
qbrass 9y ago
Think of it like casino chips. The house is giving them out instead of money when you win, hoping you'll lose them playing instead of cashing out. That way they only need the money they expect to have to cash out instead of the value of the chips on the floor.
- bufferoverflow 9y ago
  But you buy casino chips, because you don't have a choice. With crypto you have tons of options, especially on Bitfinex.

EthanHeilman 9y ago

>why not just hold the real dollars? Some exchanges don't accept fiat, so if you want to trade USD/BTC you settle for USDT/BTC.

paulgb 9y ago
Do you know if any of these exchanges are part of the index CME uses?
- thisisit 9y ago
  Out of the constituent exchanges only Kraken has USDT markets. Though I am not sure if they have difficulties in cashing out USD or not.

Scott_Sanderson 9y ago

No one is buying those tethers. Bitfinex is printing them and using them on their own exchange's margin trading market. They use it to wash trade the price up or down as desired. There is some evidence they have been wash trading down to trigger stop loss sell orders and buying the cheap coins. Then they wash trade up and sell.

jcoffland 9y ago
This is pure speculation.
- coralreef 9y ago
  The relationship between Bitfinex and Tether is real though, executives have positions and board seats in both companies.
bufferoverflow 9y ago
That answer doesn't make any sense. Bitfinex is buying bitcoins from itself? Could you please explain in more detail?
- jonknee 9y ago
  People get upset when you print USD, so Bitfinex instead creates USDT out of thin air and then uses it to buy BTC on its exchange. This would be OK if the Tether was actually backed by USD reserves dollar for dollar, but there is zero evidence that this is the case.
  - bufferoverflow 9y ago
    I understand that, but my question is why would anyone buy USDTs in such quantities? The total is now close to a billion dollars, as far as I understand.
    - jonknee 9y ago
      Exchanges make it cheaper/easier because they're all light on USD and banking/tax rules make all sorts of sketchy characters want to avoid USD. There are also probably a lot of people who don't know any better and think that it's as safe as USD.
  - bduerst 9y ago
    How have they not been sued for this yet? They're advertising monopoly money as being backed by real money.
    - empath75 9y ago
      They actually say on the website that they're not redeemable.
- ufo 9y ago
  Bitfinex isn't buying Bitcoin from itself. It is buying from customers that use their exchange, using fake money that they are printing out of thin air.
deleted 9y ago
[deleted]

jcoffland 9y ago

Tethers are used on exchanges that don't deal in dollars. Traders who want to sell Bitcoin for USD sell them instead for USDT (Tether). Theses are the people who are buying the newly issued Tether. New Tethers are issued so that USDT stays very close to $1. This works great as long as Bitcoin continues to go up relative to the dollar. If/when Bitcoin goes down significantly theses same exchanges would need to buy up Tether to keep the price near $1. But that means the issuers of Tether will have to give up the massive profits they are currently reaping. If they don't the house of cards comes crashing down.

jonknee 9y ago
> New Tethers are issued so that USDT stays very close to $1. That's the problem, new Tethers should only be issued when $1 USD is sent to the issuer and deposited in its audited bank account.

qbrass 9y ago

Think of it like casino chips. The house is giving them out instead of money when you win, hoping you'll lose them playing instead of cashing out. That way they only need the money they expect to have to cash out instead of the value of the chips on the floor.

bufferoverflow 9y ago
But you buy casino chips, because you don't have a choice. With crypto you have tons of options, especially on Bitfinex.