5 ms·

If Tether is not legitimate, wouldn't Tether holders sell their Tether for BTC and other crypto assets which would increase the prices of crypto assets? Does i

by jcsnv 9y ago

If Tether is not legitimate, wouldn't Tether holders sell their Tether for BTC and other crypto assets which would increase the prices of crypto assets? Does it matter if Tether is not backed by USD if none of the exchanges will let you trade fiat for Tether anyways? What if people just want to believe that its backed by USD? What if Tether not being legitimate is already priced into BTC? Wouldn't the supply of Tether need to be orders of magnitudes higher in order to be a systemic problem to BTC and other crypto assets? Its market capitalization isn't even 1% of the total crypto market.

dragonwriter 9y ago
> What if Tether not being legitimate is already priced into BTC? Then that would be evident in the difference between USDT/BTC prices and USD/BTC prices and, would either also be directly reflected in the USDT/USD price or there'd be a huge arbitrage opportunity.
hbosch 9y ago
I think the main trouble is centered directly on Bitfinex, the exchange that mints Tether. According to Bitcointy's charts[0], Bitfinex trading volume over the past 30 days is roughly 1.59M BTC as of this post – that equates to over 30% of the BTC trading market. As I understand it, despite this massive volume Bitfinex will not convert to/issue any fiat in the form of withdrawals. This is why they created Tether (USDT) with 1:1 parity to USD. (I'm sure you know all of this, but I am much less knowledgable about modern crypto markets so I have to explain it to myself as I type – sorry if I am coming off as patronizing.) If Tether is not legitimate, and the price suddenly crashes, I think the effects would be hard to predict. My assumption is that Bitfinex is not liquid enough in any coin to cover the losses of a crashed Tether as trust in their entire exchange is tied to that particular coin. But at this point I have no idea what would happen, I don't think anyone really does. If there was a run on Bitfinex, the world's largest BTC exchange, I think the effects would be pretty dramatic. 0. https://data.bitcoinity.org/markets/volume/30d?c=e&t=b https://data.bitcoinity.org/markets/volume/30d?c=e&t=b
- makomk 9y ago
  Bitfinex have been offering real USD withdrawals to bank accounts for a few months now, in theory at least, though there's a certain amount of shadiness surrounding them.
rhino369 9y ago
>If Tether is not legitimate, wouldn't Tether holders sell their Tether for BTC and other crypto assets which would increase the prices of crypto assets? It would increase the price of BTC in tether. But the tether to dollar peg would fail. All the BTC stored in tether based exchanges would move to fiat based exhanges. If people decide to hold onto BTC because it is safer, it might cause a price increase for a short time. But people who held tether, would likely be interested in selling BTC for real cash. The whole point of tether was to avoid the price instability of other coins. Plus, if tether really has printed a billion dollars or more of fake dollars, the disappearnce of that will cause the price to drop over the long term. And don't discount pure panic. Market cap is a stupid measurement for currencies. Two billion of fake money could distort the "market cap" by hundreds of billions. You also have to wonder if shady exchanges just decide they are better off stealing all the coins now. Because without tether, a lot of them won't survive.
jandrese 9y ago
Who is going to sell their BTC for Tethers once it becomes obvious that Tether is insolvent and the coins are worthless?

by jcsnv 9y ago

dragonwriter 9y ago

> What if Tether not being legitimate is already priced into BTC? Then that would be evident in the difference between USDT/BTC prices and USD/BTC prices and, would either also be directly reflected in the USDT/USD price or there'd be a huge arbitrage opportunity.

hbosch 9y ago

I think the main trouble is centered directly on Bitfinex, the exchange that mints Tether. According to Bitcointy's charts[0], Bitfinex trading volume over the past 30 days is roughly 1.59M BTC as of this post – that equates to over 30% of the BTC trading market. As I understand it, despite this massive volume Bitfinex will not convert to/issue any fiat in the form of withdrawals. This is why they created Tether (USDT) with 1:1 parity to USD. (I'm sure you know all of this, but I am much less knowledgable about modern crypto markets so I have to explain it to myself as I type – sorry if I am coming off as patronizing.) If Tether is not legitimate, and the price suddenly crashes, I think the effects would be hard to predict. My assumption is that Bitfinex is not liquid enough in any coin to cover the losses of a crashed Tether as trust in their entire exchange is tied to that particular coin. But at this point I have no idea what would happen, I don't think anyone really does. If there was a run on Bitfinex, the world's largest BTC exchange, I think the effects would be pretty dramatic. 0. https://data.bitcoinity.org/markets/volume/30d?c=e&t=b https://data.bitcoinity.org/markets/volume/30d?c=e&t=b

makomk 9y ago
Bitfinex have been offering real USD withdrawals to bank accounts for a few months now, in theory at least, though there's a certain amount of shadiness surrounding them.

rhino369 9y ago

>If Tether is not legitimate, wouldn't Tether holders sell their Tether for BTC and other crypto assets which would increase the prices of crypto assets? It would increase the price of BTC in tether. But the tether to dollar peg would fail. All the BTC stored in tether based exchanges would move to fiat based exhanges. If people decide to hold onto BTC because it is safer, it might cause a price increase for a short time. But people who held tether, would likely be interested in selling BTC for real cash. The whole point of tether was to avoid the price instability of other coins. Plus, if tether really has printed a billion dollars or more of fake dollars, the disappearnce of that will cause the price to drop over the long term. And don't discount pure panic. Market cap is a stupid measurement for currencies. Two billion of fake money could distort the "market cap" by hundreds of billions. You also have to wonder if shady exchanges just decide they are better off stealing all the coins now. Because without tether, a lot of them won't survive.

jandrese 9y ago

Who is going to sell their BTC for Tethers once it becomes obvious that Tether is insolvent and the coins are worthless?