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The somewhat ironic part is that one of the core concepts of Bitcoin is that you can't counterfeit it. You can mathematically prove how many coins you own, if s

by simias 9y ago

The somewhat ironic part is that one of the core concepts of Bitcoin is that you can't counterfeit it. You can mathematically prove how many coins you own, if somebody sends you 3 BTC then once it's been validated on the blockchain you know that the money is now yours, they can't have lied, it can't bounce like a cheque Except this Bitfinex thing shows that while an amount of bitcoin can't be manipulated or counterfeited, their actual value is relatively easy to influence because it's mostly unregulated. I mean think about it, if Bitfinex is lying about their dollar reserves this might be one of the simplest and most efficient scams of all time. They're literally making up money as they see fit. Hundreds of millions at a time. Just like that. Now of course maybe they're not actually crooks and they do have the money, it's kind of a schrodinger's cat scenario at the moment. Still, the fact that nobody manages to know for sure the truth of the matter shows that they could be doing it and we'd be none the wiser. People are buying and selling for million of dollars of these things, not knowing if they're trading digital dollar bills or monopoly money.

bby 9y ago
The probability of them being a crook is sufficiently high enough to warrant panic by the masses (or scaling down). Why would you invest in crypto when scams like this are possible? Mass exodus from the space may occur in the short/medium term. Advanced regulation in the space may permanently dissuade participants.
FiveSquared 9y ago
Preach brotha! Preach!
- dang 9y ago
  You've been posting a bunch of unsubstantive comments. We actually ban accounts that do that because HN is trying for a higher quality level. Trying and failing, often, but we need to keep trying. So could you please not do that in comment threads here? https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newswelcome.html https://news.ycombinator.com/newswelcome.html
duxup 9y ago
The amazing transparency of the crypto tech has been overshadowed by a total lack of transparency in every other way.
- blibble 9y ago
  it's almost as if fraud is mostly a societal problem rather than a technological problem...
  - fwdpropaganda 9y ago
    And that's why anyone who has any experience in the stock market isn't suprised with what's happening: they've seen it before and they've been warning about this. EDIT: As I was typing a response, your username seemed familiar. Turns out it's not the first time I see you on HN saying sensible stuff. https://news.ycombinator.com/item?id=16268736 https://news.ycombinator.com/item?id=16268736
- blueprint 9y ago
  You mean the transparency of private individuals and organizations managing their own funds? Ok, let's assume, for the sake of argument, that you are entitled to and able to access that information and that it is somehow more available in _existing_ centralized systems. How are you going to enforce or even verify the degree of a centralized governance system's transparency? You can't. So your comment is somewhat deceptive, imo.
  - duxup 9y ago
    I'm not sure what you are saying. Obviously there is no "entitled" or enforcement. The difficulty in doing that makes it no less a problem. It does contrast with what seemed to be a big Bitcoin positive or selling point (call it what you want) transparency.
- jebeng 9y ago
  Well to be fair, the reason we're having this discussion now is because people have been watching and questioning the expansion of the Tether supply via its transparent blockchain. Someone could probably argue this is a step in the right direction from the days of Mt. Gox and its complete lack of transparency.
Hermel 9y ago
I would guess that the traders who hold millions worth of tether have a good business relationship with Bitfinex and have more information than is publicly available. And that information seems to make Tether more trustworthy. A reason why they don’t want to make their bank statements public is that their bank fears being cut off from USD clearing once it gets known that they are handling Bitfinex funds. So there are actually valid reasons to be secretive and the unsatisfactory level of public information is a side effect of the whole regulatory circus the financial sector is burdened with.
- ceejayoz 9y ago
  They don't have to make the name of their bank public. They just have to prove it exists to their auditor. Who just severed ties with them and deleted any mention of them from their website.
conanbatt 9y ago
The most interesting thought to me right now is how the situation will develop if or bitfinex/tether crashes the market hard. I am not a fan of the SEC getting involved. Taking crypto as an experiment, I think it is better for the market to take a hit and then find organic solutions. If the SEC gets involved and busts bitfinex/tether, the community loses the opportunity to become 'unbailable'. Yes , people will lose the money, but if you create the expectation that the sec will protect you as a consumer from the scams, then we will not be sophisticated to actually organically ignore scams. What will happen next, FDIC and too big to fail institutions?
- kadenshep 9y ago
  >and then find organic solutions. I don't understand this perspective. You have a proven, verifiable, simple solution right in front of you. Then you ignore it with some skimpy platitude to dive right into economic mythology. Regulation is the correct solution.
  - stinkytaco 9y ago
    > Regulation is the correct solution. I once read (here, perhaps) that Bitcoin is a long demonstration in how regulation comes to exist. I think many in the Bitcoin community conflate "regulation" with "monetary policy". They assume if bitcoin is treated like money, with laws that protect people from fraud, that must somehow lead to restrictive monetary policy, which the community tends to abhor.
    - theptip 9y ago
      > Bitcoin is a long demonstration in how regulation comes to exist. Or perhaps a short demonstration, given that BTC appears to be recapitulating the entire history of currency in a few years?
    - saosebastiao 9y ago
      Exactly. It boggles my mind that people can't grasp the difference between the two. I hate the fed and the department of the treasury, and think QE is a horrible policy just like our permanent deficit. But I happily welcome the SEC and FINRA getting involved in cryptocurrency.
sathishmanohar 9y ago
the simplest and most efficient scams of all time. This maybe the simplest scam but I think the most efficient one is the one being pulled by the fed.
- Aunche 9y ago
  Yes, I'm sure that Janet Yellen takes the stress and responsibility of maintaining the world's largest bank for the whopping 200k salary.
keymone 9y ago
> if Bitfinex is lying about their dollar reserves this might be one of the simplest and most efficient scams of all time i get what you're saying, but doesn't this mean that value of USDT is fake rather than value of BTC? in the end it's those that hold USDT will run to sell it either for USD or BTC, which would push BTC price even higher? now that would be ironic!
- Nursie 9y ago
  >> i get what you're saying, but doesn't this mean that value of USDT is fake rather than value of BTC? If two billion tokens which people have taken to be as good as USD have entered the market, they will have inflated the price of BTC and other coins >> in the end it's those that hold USDT will run to sell it either for USD or BTC, which would push BTC price even higher? now that would be ironic! The price in USDT and USDT-only exchanges could indeed rocket, but the price in real actual USD would be expected to fall. I don't think that's ironic ... ? --edit-- I seem to be rate limited at the moment so I am going to reply to the post below, here. Why do you think, in a situation where tether fails, that the BTC/ETH price on bitfinex would change? The price of BTC in tethers may rocket, but the price of ETH in tethers also would rocket, as nobody would want tether. The price of ETH in BTC is unlikely to move much. There's no arb opportunity I can see.
  - IronKettle 9y ago
    > The price in USDT and USDT-only exchanges could indeed rocket, but the price in real actual USD would be expected to fall. Wait, would it? If you were an arb wouldn't you: 1) Buy bitcoin on a different exchange (with a temporarily lower price) 2) Transfer that bitcoin to, say, bitfinex (or another USDT exchange) 3) Sell that bitcoin for, say, ETH 4) Transfer that ETH back to the first exchange 5) Profit Though I guess that would also flood the market and tank the ETH-BTC price as well (though I guess another arb could take advantage of that discrepancy as well). Or are you talking about exchanges that only do USDT-BTC?
Alex3917 9y ago
Keep in mind that Bitfinex can have the money and still be crooks. The feds probably care more about money laundering than they do about whether or not the money actually exists. Even if all the money behind Tether is real, the end result for the markets may be the same.
- tim333 9y ago
  It would be much less of a disruption if they didn't go bust.
sciyoshi 9y ago
> They're literally making up money as they see fit. I'm playing devil's advocate here (I agree that the whole Tether situation is concerning), but also genuinely curious - is this any different than what banks have been doing for forever with fractional reserve? Even if Bitfinex is overcommitted and there's more USDT in circulation than they have in USD reserves, is there a problem unless a lot of people try to convert at once?
- oldgradstudent 9y ago
  In a panic (which happens periodically) a lot of people try to convert at once. But there's no central bank to bail them out.
- theptip 9y ago
  To answer your direct question, Tether is sold as a fully-backed instrument, so there's major (potentially billions of dollars of) fraud if it's not fully backed. That's an issue because consumers aren't getting what they paid for, i.e. the underlying risk profile is different from what they thought the were buying. The big difference with Tether is that in traditional banking, fractional reserves are legal, and regulated (i.e. banks are required to prove their reserves, and are required to hold a certain percentage of their deposits). If there's a run on a consumer bank, and they don't have enough reserves to repay their customers, then FDIC insurance steps in to protect the customers. In this case, there's no protection, so everyone holding tether will be screwed if there's a run.
  - oil7abibi 9y ago
    So if Tether was FDIC backed, then you’d technically be OK with this situation?
    - bomb199 9y ago
      Not OP, but I presume the regulations would be important too. Part of being FDIC backed is maintaining a certain amount of currency that is VERIFIED. Issue here is that there is no one giving confidence that Bitfenix has any currency at all, we have to trust their word.
cocktailpeanuts 9y ago
> Except this Bitfinex thing shows that while an amount of bitcoin can't be manipulated or counterfeited, their actual value is relatively easy to influence. This is because the only usage Bitcoin has left is a lottery ticket. Bitcoin used to actually have utility value (payment) but now with that gone, it is easy to manipulate the price because its value is built on people's perception only. If Bitcoin was still being used to send money across borders, to buy things with super low transaction cost, send money without censorship-which by the way used to be why a lot of people saw value in it in the first place--it wouldn't be so easy to manipulate the value because any fool can see that there obviously is value in there. Bitcoin losing utility has singlehandedly created the scam market we're seeing right now. People who want to make money choose the most efficient way to make money. And if they can see that they could make more money by building productive things on top of Bitcoin instead of building their own scam coin or scam scheme to manipulate the idiots who fall for it, they would probably rather work on those instead. But that's not the case, which is why we are where we are.
- 282883392 9y ago
  >If Bitcoin was still being used to send money across borders, to buy things with super low transaction cost, send money without censorship-which by the way used to be why a lot of people saw value in it in the first place--it wouldn't be so easy to manipulate the value because any fool can see that there obviously is value in there. Bitcoin had all those things - not that long ago. You need volume to ensure stability, not utility.
  - cocktailpeanuts 9y ago
    > You need volume to ensure stability, not utility Wow you've drunk some serious kool-aid there. You need both. A huge volume of nothing is still nothing. The "you need volume for stability" argument is what pro-bitcoin people used to say when Bitcoin could actually be used as a currency. Many people would say "Bitcoin isn't a legit currency because it's so volatile", and we would say "No, that's only because there isn't enough Bitcoins out there yet compared to USD for example". This was a valid argument and used to be my go-to-comment for convincing people. But that's only when Bitcoin can be used for something. Now Bitcoin is like a pet rock, it's scarce, but very risky because the value that comes from the scarcity is based on people's perception only and not based on utility. My point was that if the value is based only on perception (speculative value), this is very susceptible to manipulation. I can't believe people actually believe just because something is scarce it's automatically valuable.
kernelPan1c 9y ago
Regulation doesn't affect the ability of a currency to be influenced. It just puts that ability in the hands of a select few. The US govt prints money to pay off maturing debt. After some time, this scheme will come to a disastrous end. As long as there's trust in the central auth, both Tether and USD can survive.
nickbauman 9y ago
The problems we're seeing with cryptocurrencies are utterly unsurprising if you know what money really is and how it actually works. I think people who are excited about cryptocurrencies assume that money is merely a tool to facilitate transactions between parties of people. The fundamental model of this is two people bartering goods, lol, in some sort of imagined "forest primeval" before money was invented. That money is just a substitute for that behavior. It's hopelessly naive.
- fdchn2018 9y ago
  Finally created an account to reply to this. There is a great thread on Reddit called - Where has all the world's money gone, explain it like I'm 5. It starts from a convenient barter system. As I was reflecting on the various ICOs I realised that the technology and the blockchain makes the old barter system very efficient. So I do believe that in fact it is a substitute for that behaviour. In fact Im convinced that bitcoin or something like it will become the new gold. If you also think about why we needed to elect representatives, it was so that they would represent the needs of the people. Once I can vote/discuss a topic on the blockchain, I dont need representatives anymore. The blockchain and crypto currencies are going to change the way democracies operate. We're not going to need our elected leaders. This is why you see them spreading so much FUD. Cause they know they're going to be irrelevant in the system and access to all that money is going to go. Tomorrow if I want to build a bridge - going to setup a smart contract - with escrow payments - validated by the people. You hit your milestone and the money gets released. And why not it be digital money. This new wave is being built ground up and govts cannot stop it - even if they want.
  - IntronExon 9y ago
    That’s a long way to go to just proselytize without addressing any of the previous concerns. You seem to be reading from the same script all of the “new accounts” use to boost cryptocurrency as well. Finally you claim governments can’t stop something which creates a cryptographically secure “paper” trail. No.
    - 9y ago
deleted 9y ago
[deleted]
Feniks 9y ago
I'm not very good at these things but it always struck me as odd: SAYING that a bitcoin is worth 1$ doesn't make it magically SO.
pithic 9y ago
> not knowing if they're trading digital dollar bills or monopoly money Is there a difference?
rst 9y ago
"Of course maybe they're not actually crooks and they do have the money." Well then, an audit by competent third parties, inspecting where they got their funds, how much they actually have on hand, and whether it covers all potential liabilities (including calls on the supposedly dollar-backed tethers) would go a long way to clearing up the matter. Bitfinex announced an audit with great fanfare early last year. They disclosed last weekend that their relationship with the auditor had "dissolved". Funny, that. https://www.coindesk.com/tether-confirms-relationship-auditor-dissolved/ https://www.coindesk.com/tether-confirms-relationship-audito...
- MarkMc 9y ago
  To me this is very strong evidence that Tether is a scam. So why is anyone willing to pay $1 for a Tether?
  - qyv 9y ago
    Is anyone actually paying dollars for Tether, or are they just using them to buy/sell other cryptocurrencies?
- tim333 9y ago
  Or they may be crooks and also have the money. I suspect that with people selling bitcoins for tether they didn't bother changing the bitcoins into usd but thought we can hold these things while they go up and pocket the difference. But if they've been smart with bitcoin trading they may be well ahead.
ric2b 9y ago
What if they were buying gold with their Tethers? Or anything else? There's nothing that makes Bitcoin inherently "vulnerable" to being bought with Tethers beyond being easily trade-able and being available on the same exchanges.

by simias 9y ago

bby 9y ago

The probability of them being a crook is sufficiently high enough to warrant panic by the masses (or scaling down). Why would you invest in crypto when scams like this are possible? Mass exodus from the space may occur in the short/medium term. Advanced regulation in the space may permanently dissuade participants.

FiveSquared 9y ago

Preach brotha! Preach!

dang 9y ago
You've been posting a bunch of unsubstantive comments. We actually ban accounts that do that because HN is trying for a higher quality level. Trying and failing, often, but we need to keep trying. So could you please not do that in comment threads here? https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newswelcome.html https://news.ycombinator.com/newswelcome.html

duxup 9y ago

The amazing transparency of the crypto tech has been overshadowed by a total lack of transparency in every other way.

blibble 9y ago
it's almost as if fraud is mostly a societal problem rather than a technological problem...
- fwdpropaganda 9y ago
  And that's why anyone who has any experience in the stock market isn't suprised with what's happening: they've seen it before and they've been warning about this. EDIT: As I was typing a response, your username seemed familiar. Turns out it's not the first time I see you on HN saying sensible stuff. https://news.ycombinator.com/item?id=16268736 https://news.ycombinator.com/item?id=16268736
blueprint 9y ago
You mean the transparency of private individuals and organizations managing their own funds? Ok, let's assume, for the sake of argument, that you are entitled to and able to access that information and that it is somehow more available in _existing_ centralized systems. How are you going to enforce or even verify the degree of a centralized governance system's transparency? You can't. So your comment is somewhat deceptive, imo.
- duxup 9y ago
  I'm not sure what you are saying. Obviously there is no "entitled" or enforcement. The difficulty in doing that makes it no less a problem. It does contrast with what seemed to be a big Bitcoin positive or selling point (call it what you want) transparency.
jebeng 9y ago
Well to be fair, the reason we're having this discussion now is because people have been watching and questioning the expansion of the Tether supply via its transparent blockchain. Someone could probably argue this is a step in the right direction from the days of Mt. Gox and its complete lack of transparency.

Hermel 9y ago

I would guess that the traders who hold millions worth of tether have a good business relationship with Bitfinex and have more information than is publicly available. And that information seems to make Tether more trustworthy. A reason why they don’t want to make their bank statements public is that their bank fears being cut off from USD clearing once it gets known that they are handling Bitfinex funds. So there are actually valid reasons to be secretive and the unsatisfactory level of public information is a side effect of the whole regulatory circus the financial sector is burdened with.

ceejayoz 9y ago
They don't have to make the name of their bank public. They just have to prove it exists to their auditor. Who just severed ties with them and deleted any mention of them from their website.

conanbatt 9y ago

The most interesting thought to me right now is how the situation will develop if or bitfinex/tether crashes the market hard. I am not a fan of the SEC getting involved. Taking crypto as an experiment, I think it is better for the market to take a hit and then find organic solutions. If the SEC gets involved and busts bitfinex/tether, the community loses the opportunity to become 'unbailable'. Yes , people will lose the money, but if you create the expectation that the sec will protect you as a consumer from the scams, then we will not be sophisticated to actually organically ignore scams. What will happen next, FDIC and too big to fail institutions?

kadenshep 9y ago
>and then find organic solutions. I don't understand this perspective. You have a proven, verifiable, simple solution right in front of you. Then you ignore it with some skimpy platitude to dive right into economic mythology. Regulation is the correct solution.
- stinkytaco 9y ago
  > Regulation is the correct solution. I once read (here, perhaps) that Bitcoin is a long demonstration in how regulation comes to exist. I think many in the Bitcoin community conflate "regulation" with "monetary policy". They assume if bitcoin is treated like money, with laws that protect people from fraud, that must somehow lead to restrictive monetary policy, which the community tends to abhor.
  - theptip 9y ago
    > Bitcoin is a long demonstration in how regulation comes to exist. Or perhaps a short demonstration, given that BTC appears to be recapitulating the entire history of currency in a few years?
  - saosebastiao 9y ago
    Exactly. It boggles my mind that people can't grasp the difference between the two. I hate the fed and the department of the treasury, and think QE is a horrible policy just like our permanent deficit. But I happily welcome the SEC and FINRA getting involved in cryptocurrency.

sathishmanohar 9y ago

the simplest and most efficient scams of all time. This maybe the simplest scam but I think the most efficient one is the one being pulled by the fed.

Aunche 9y ago
Yes, I'm sure that Janet Yellen takes the stress and responsibility of maintaining the world's largest bank for the whopping 200k salary.

keymone 9y ago

> if Bitfinex is lying about their dollar reserves this might be one of the simplest and most efficient scams of all time i get what you're saying, but doesn't this mean that value of USDT is fake rather than value of BTC? in the end it's those that hold USDT will run to sell it either for USD or BTC, which would push BTC price even higher? now that would be ironic!

Nursie 9y ago
>> i get what you're saying, but doesn't this mean that value of USDT is fake rather than value of BTC? If two billion tokens which people have taken to be as good as USD have entered the market, they will have inflated the price of BTC and other coins >> in the end it's those that hold USDT will run to sell it either for USD or BTC, which would push BTC price even higher? now that would be ironic! The price in USDT and USDT-only exchanges could indeed rocket, but the price in real actual USD would be expected to fall. I don't think that's ironic ... ? --edit-- I seem to be rate limited at the moment so I am going to reply to the post below, here. Why do you think, in a situation where tether fails, that the BTC/ETH price on bitfinex would change? The price of BTC in tethers may rocket, but the price of ETH in tethers also would rocket, as nobody would want tether. The price of ETH in BTC is unlikely to move much. There's no arb opportunity I can see.
- IronKettle 9y ago
  > The price in USDT and USDT-only exchanges could indeed rocket, but the price in real actual USD would be expected to fall. Wait, would it? If you were an arb wouldn't you: 1) Buy bitcoin on a different exchange (with a temporarily lower price) 2) Transfer that bitcoin to, say, bitfinex (or another USDT exchange) 3) Sell that bitcoin for, say, ETH 4) Transfer that ETH back to the first exchange 5) Profit Though I guess that would also flood the market and tank the ETH-BTC price as well (though I guess another arb could take advantage of that discrepancy as well). Or are you talking about exchanges that only do USDT-BTC?

Alex3917 9y ago

Keep in mind that Bitfinex can have the money and still be crooks. The feds probably care more about money laundering than they do about whether or not the money actually exists. Even if all the money behind Tether is real, the end result for the markets may be the same.

tim333 9y ago
It would be much less of a disruption if they didn't go bust.

sciyoshi 9y ago

> They're literally making up money as they see fit. I'm playing devil's advocate here (I agree that the whole Tether situation is concerning), but also genuinely curious - is this any different than what banks have been doing for forever with fractional reserve? Even if Bitfinex is overcommitted and there's more USDT in circulation than they have in USD reserves, is there a problem unless a lot of people try to convert at once?

oldgradstudent 9y ago
In a panic (which happens periodically) a lot of people try to convert at once. But there's no central bank to bail them out.
theptip 9y ago
To answer your direct question, Tether is sold as a fully-backed instrument, so there's major (potentially billions of dollars of) fraud if it's not fully backed. That's an issue because consumers aren't getting what they paid for, i.e. the underlying risk profile is different from what they thought the were buying. The big difference with Tether is that in traditional banking, fractional reserves are legal, and regulated (i.e. banks are required to prove their reserves, and are required to hold a certain percentage of their deposits). If there's a run on a consumer bank, and they don't have enough reserves to repay their customers, then FDIC insurance steps in to protect the customers. In this case, there's no protection, so everyone holding tether will be screwed if there's a run.
- oil7abibi 9y ago
  So if Tether was FDIC backed, then you’d technically be OK with this situation?
  - bomb199 9y ago
    Not OP, but I presume the regulations would be important too. Part of being FDIC backed is maintaining a certain amount of currency that is VERIFIED. Issue here is that there is no one giving confidence that Bitfenix has any currency at all, we have to trust their word.

cocktailpeanuts 9y ago

> Except this Bitfinex thing shows that while an amount of bitcoin can't be manipulated or counterfeited, their actual value is relatively easy to influence. This is because the only usage Bitcoin has left is a lottery ticket. Bitcoin used to actually have utility value (payment) but now with that gone, it is easy to manipulate the price because its value is built on people's perception only. If Bitcoin was still being used to send money across borders, to buy things with super low transaction cost, send money without censorship-which by the way used to be why a lot of people saw value in it in the first place--it wouldn't be so easy to manipulate the value because any fool can see that there obviously is value in there. Bitcoin losing utility has singlehandedly created the scam market we're seeing right now. People who want to make money choose the most efficient way to make money. And if they can see that they could make more money by building productive things on top of Bitcoin instead of building their own scam coin or scam scheme to manipulate the idiots who fall for it, they would probably rather work on those instead. But that's not the case, which is why we are where we are.

282883392 9y ago
>If Bitcoin was still being used to send money across borders, to buy things with super low transaction cost, send money without censorship-which by the way used to be why a lot of people saw value in it in the first place--it wouldn't be so easy to manipulate the value because any fool can see that there obviously is value in there. Bitcoin had all those things - not that long ago. You need volume to ensure stability, not utility.
- cocktailpeanuts 9y ago
  > You need volume to ensure stability, not utility Wow you've drunk some serious kool-aid there. You need both. A huge volume of nothing is still nothing. The "you need volume for stability" argument is what pro-bitcoin people used to say when Bitcoin could actually be used as a currency. Many people would say "Bitcoin isn't a legit currency because it's so volatile", and we would say "No, that's only because there isn't enough Bitcoins out there yet compared to USD for example". This was a valid argument and used to be my go-to-comment for convincing people. But that's only when Bitcoin can be used for something. Now Bitcoin is like a pet rock, it's scarce, but very risky because the value that comes from the scarcity is based on people's perception only and not based on utility. My point was that if the value is based only on perception (speculative value), this is very susceptible to manipulation. I can't believe people actually believe just because something is scarce it's automatically valuable.

kernelPan1c 9y ago

Regulation doesn't affect the ability of a currency to be influenced. It just puts that ability in the hands of a select few. The US govt prints money to pay off maturing debt. After some time, this scheme will come to a disastrous end. As long as there's trust in the central auth, both Tether and USD can survive.

nickbauman 9y ago

The problems we're seeing with cryptocurrencies are utterly unsurprising if you know what money really is and how it actually works. I think people who are excited about cryptocurrencies assume that money is merely a tool to facilitate transactions between parties of people. The fundamental model of this is two people bartering goods, lol, in some sort of imagined "forest primeval" before money was invented. That money is just a substitute for that behavior. It's hopelessly naive.

fdchn2018 9y ago
Finally created an account to reply to this. There is a great thread on Reddit called - Where has all the world's money gone, explain it like I'm 5. It starts from a convenient barter system. As I was reflecting on the various ICOs I realised that the technology and the blockchain makes the old barter system very efficient. So I do believe that in fact it is a substitute for that behaviour. In fact Im convinced that bitcoin or something like it will become the new gold. If you also think about why we needed to elect representatives, it was so that they would represent the needs of the people. Once I can vote/discuss a topic on the blockchain, I dont need representatives anymore. The blockchain and crypto currencies are going to change the way democracies operate. We're not going to need our elected leaders. This is why you see them spreading so much FUD. Cause they know they're going to be irrelevant in the system and access to all that money is going to go. Tomorrow if I want to build a bridge - going to setup a smart contract - with escrow payments - validated by the people. You hit your milestone and the money gets released. And why not it be digital money. This new wave is being built ground up and govts cannot stop it - even if they want.
- IntronExon 9y ago
  That’s a long way to go to just proselytize without addressing any of the previous concerns. You seem to be reading from the same script all of the “new accounts” use to boost cryptocurrency as well. Finally you claim governments can’t stop something which creates a cryptographically secure “paper” trail. No.
  - 9y ago

deleted 9y ago

[deleted]

Feniks 9y ago

I'm not very good at these things but it always struck me as odd: SAYING that a bitcoin is worth 1$ doesn't make it magically SO.

pithic 9y ago

> not knowing if they're trading digital dollar bills or monopoly money Is there a difference?

rst 9y ago

"Of course maybe they're not actually crooks and they do have the money." Well then, an audit by competent third parties, inspecting where they got their funds, how much they actually have on hand, and whether it covers all potential liabilities (including calls on the supposedly dollar-backed tethers) would go a long way to clearing up the matter. Bitfinex announced an audit with great fanfare early last year. They disclosed last weekend that their relationship with the auditor had "dissolved". Funny, that. https://www.coindesk.com/tether-confirms-relationship-auditor-dissolved/ https://www.coindesk.com/tether-confirms-relationship-audito...

MarkMc 9y ago
To me this is very strong evidence that Tether is a scam. So why is anyone willing to pay $1 for a Tether?
- qyv 9y ago
  Is anyone actually paying dollars for Tether, or are they just using them to buy/sell other cryptocurrencies?
tim333 9y ago
Or they may be crooks and also have the money. I suspect that with people selling bitcoins for tether they didn't bother changing the bitcoins into usd but thought we can hold these things while they go up and pocket the difference. But if they've been smart with bitcoin trading they may be well ahead.

ric2b 9y ago

What if they were buying gold with their Tethers? Or anything else? There's nothing that makes Bitcoin inherently "vulnerable" to being bought with Tethers beyond being easily trade-able and being available on the same exchanges.