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The whole Tethers thing scares me the most: https://twitter.com/Bitfinexed/status/953398351889944576 https://twitter.com/Bitfinexed/status/953398351889944576
by ErikAugust 9y ago
The whole Tethers thing scares me the most:
https://twitter.com/Bitfinexed/status/953398351889944576 https://twitter.com/Bitfinexed/status/953398351889944576
There's $5B worth.
- trhway 9y agoTether performs public service of "quantitative easing" :)
- matthewbauer 9y agoI hope people recognize how bad that is for holders.
- cies 9y agoWhen the demand for USDT shrinks, will they also do quantative uneasing? As in buying back USDTs to the extend the value of one USDT cannot drop below $1? I do not think they will, because I do not think they can...
- buildawesome 9y agoEssentially, this is what interest rates and the bond market is for.
- cies 9y agoPlease explain. I think you are not aware of what USDT (Tether) is, but that's just my quick judgement.
- bandrami 9y agoIt's like all the Goldbugs forget that this is what happened, over and over and over again, when countries were on the gold standard: entities would make allegedly convertible instruments that everybody knew weren't really convertible, but everybody acted like they were, until a run finally forced a suspension of convertibility. Like, once a decade or so. At the cost of great human suffering.
- dudus 9y agoHoly Shit, are they just trying to print out tethers out of thin air right now to pump Bitcoin? And it seems to be working, at least for now. This can't end up well.
- flashmob 9y ago> Holy Shit, are they just trying to print out tethers out of thin air right now to pump Bitcoin? That's the line I often see on Twitter / Reddit and usually gets a lot of upvotes, despite being irrational, with no proof to back it up. As bitcoin falls, the demand for Tethers goes up. To keep Tethers pegged to, say, $1 USD, they need issue more to meet the demand, which would be a more rational explanation why more were issued.
- klipt 9y ago> As bitcoin falls, the demand for Tethers goes up. Or maybe people want USD, but the exchange forces them to go through Tether to get there. So there'll be a brief demand for Tethers, then a big selloff of Tether for USD.
- flashmob 9y agoYes, that's what I meant by "demand for tethers go up". Although at present, there are only two exchanges that offer Tethers/USD market (Kraken & Bitfinex). Eventually, majority of those holding Tether will probably get back in to crypto. Indeed, holding Tethers could be risky, especially if the peg brakes, there are no guarantees that it will always be stable.
- ActsJuvenile 9y agoThe problem people have with Tether is their promise of 1 USDT = 1 USD. Tether was kicked out of their HK and Taiwan banks, and now they are banking in Caribbean islands. They are supposedly holding $1.55 Billion USD cash in one of those banks to back USDT issued so far. My question is, have you seen a Caribbean bank? Most bank HQs over there look like a 7-Eleven, and banks are owned by local politicians or shady characters. Anyone who deposits more than $1 million in those banks is a fool.
- Nursie 9y agoQuarter of a billion were created in the last three days. This seems like a fairly frantic attempt to prop up the value on their part.
- jmkni 9y agoCan somebody ELI5 this?
- bandrami 9y agoBitfinex is a company that produces a cryptocurrency called Tether. Tether is in terms of the tech just like any other cryptocurrency; the big difference is that Bitfinex has pegged its value to the US dollar. This is great in theory, because transactions between two types of cryptocurrencies are (relatively) easy and cheap, and with one coin pegged to a real currency, it means the crypto ecosystem is much more liquid. Now, the downside: you may have heard of the macroeconomic "Impossible Trinity"[1]. One outcome of that is that it means Bitfinex has to keep US dollars on hand equal to the total value of Tethers created. Now, the real downside: over the past couple of months (and even more over the past week), Bitfinex has issued a quantity of Tethers that most people don't actually believed are backed by US dollars, meaning they are vulnerable to a "It's a Wonderful Life"-style run. And worse yet, the liquidity Bitfinex provides has been "baked in" to the price of other cryptocurrencies for a while. At any rate, the accusation the Tweet is making is that Bitfinex is now significantly overextended, and can no longer promise to convert all the issued Tethers, meaning the Tethers (and thus all the other cryptocurrencies) are not nearly as liquid as "investors" thought they were. As many predicted[2]. Most irritatingly, this exact thing happened over, and over, and over again when countries were on the gold standard. It's why fiat currency is such a good idea. 1: https://en.wikipedia.org/wiki/Impossible_trinity https://en.wikipedia.org/wiki/Impossible_trinity 2: http://fortune.com/2017/12/05/bitcoin-btc-price-usd-tether-limited-bitfinex/ http://fortune.com/2017/12/05/bitcoin-btc-price-usd-tether-l...