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"Hundreds of millions of dollars worth of new Tether were created; almost always when the prices of other virtual currencies were heading down." Doesn't this s
by misja111 9y ago
"Hundreds of millions of dollars worth of new Tether were created; almost always when the prices of other virtual currencies were heading down."
Doesn't this simply mean that when people were selling their virtual currencies, they chose to stall their money in Tether?
- cm2187 9y agoPerhaps I don't understand it correctly but I assumed that wouldn't result in Tether being created. A holder of Tether would exchange his Tether for BTC. Only a transaction of Tether for cash would result in Tether being created.
- LargeWu 9y agoOne of the claims here is that Bitfinex was somehow creating new Tether without a USD deposit. In other words, out of thin air. This Tether would then be exchanged for Bitcoin or other crypto, causing an artificial increase in demand for those coins, and causing their price to rise.
- tomtimtall 9y agoIf you buy 100 tether for 100$ and I “sell my bitcoin for tether” by trading to you, then no new tether is created. Tether should only be issued when people buy them using new $. Their claim currently is that they have $2bil in an account backing the tether. Yet they can’t get a bank collaboration and can’t manage to get an audit. It smells fishy.
- ebbv 9y agoNo because that would involve people buying Tether. Not Tether being printed.
- notahacker 9y agoIf it's newly created Tether, the theory requires them to decide they don't want to hold as much cryptocurrency, then successfully convert large holdings of cryptocurrency to real USD in their own bank account, then wire that USD to Tether's Taiwanese bank account so that they could buy USDT, an asset whose sole virtue is it being slightly easier to buy cryptocurrency with (on exchanges that aren't good at or able to handle dollars). Which doesn't make sense period, never mind over the timescales discussed.
- meritt 9y ago> Doesn't this simply mean that when people were selling their virtual currencies, they chose to stall their money in Tether? Correct, and that's precisely how Tether helps prop up the price. There is a limited amount of actual USD floating out there to buy up BTC. People selling BTC in exchange for USD will lower the price. However two current trends can eliminate those sell orders before they impact the price. They are: * They may be convinced not to sell, that they should hodl (sic) instead. No sell order occurs. * They may be convinced to accept USDT instead of USD. No USD selling pressure occurs since they are willing to accept an IOU. So why does Tether keep printing more? It's an easy way to absorb a portion of the selling pressure that wasn't convinced to simply not sell.