3 ms·

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.
- bufferoverflow 9y ago
  And why are the customers buying USDTs in such large volumes? Technically all cryptocurrencies are "fake money printed out of thin air", so that doesn't bother me. I just don't get the appeal of holding USDT.
  - ufo 9y ago
    > And why are the customers buying USDTs in such large volumes? Tethers purchasing is currently unavailable for general consumers[1]. The only way for new customers to trade in Bitfinex is to purchase cryptocoins elsewhere and then transfer them to Bitfinex. Bitfinex claims that there are unnamed "institutional investors" that are purchasing all those tethers [2]. I find that hard to believe. Most likely, the vast majority of tethers in circulation are printed out of thin air and haven't been purchased by anyone. > Technically all cryptocurrencies are "fake money printed out of thin air" Assuming a perfectly competitive environment, the bitcoin mining rewards should converge to the cost of mining, which leaves a smaller profit. On the other hand, Tethers are unilaterally printed by Bitfinex, with no mining cost. All the printed tethers go straight towards purchasing Bitcoin and defrauding Bitfinex customers. > I just don't get the appeal of holding USDT. Bitfinex attracts speculators because they allow leveraged trading (including shorting), trade lots of different cryptocurrencies in addition to Bitcoin and have lax know your customer / anti-money-laundering requirements. But I agree with you -- I am baffled why any sane person would want to come anywhere near Bitfinex. -------- [1] https://wallet.tether.to/app/#!/signup https://wallet.tether.to/app/#!/signup [2] https://medium.com/@bitfinexed/https://medium.com/@bitfinexed/cb4ed5175092 https://medium.com/@bitfinexed/https://medium.com/@bitfinexe...

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.

bufferoverflow 9y ago
And why are the customers buying USDTs in such large volumes? Technically all cryptocurrencies are "fake money printed out of thin air", so that doesn't bother me. I just don't get the appeal of holding USDT.
- ufo 9y ago
  > And why are the customers buying USDTs in such large volumes? Tethers purchasing is currently unavailable for general consumers[1]. The only way for new customers to trade in Bitfinex is to purchase cryptocoins elsewhere and then transfer them to Bitfinex. Bitfinex claims that there are unnamed "institutional investors" that are purchasing all those tethers [2]. I find that hard to believe. Most likely, the vast majority of tethers in circulation are printed out of thin air and haven't been purchased by anyone. > Technically all cryptocurrencies are "fake money printed out of thin air" Assuming a perfectly competitive environment, the bitcoin mining rewards should converge to the cost of mining, which leaves a smaller profit. On the other hand, Tethers are unilaterally printed by Bitfinex, with no mining cost. All the printed tethers go straight towards purchasing Bitcoin and defrauding Bitfinex customers. > I just don't get the appeal of holding USDT. Bitfinex attracts speculators because they allow leveraged trading (including shorting), trade lots of different cryptocurrencies in addition to Bitcoin and have lax know your customer / anti-money-laundering requirements. But I agree with you -- I am baffled why any sane person would want to come anywhere near Bitfinex. -------- [1] https://wallet.tether.to/app/#!/signup https://wallet.tether.to/app/#!/signup [2] https://medium.com/@bitfinexed/https://medium.com/@bitfinexed/cb4ed5175092 https://medium.com/@bitfinexed/https://medium.com/@bitfinexe...