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So, BTC created 16 million coins from air and nobody complained. Ripple created 100 billion coins from air and nobody complained. Tron, Stellar, Cardano, Iota,

So, BTC created 16 million coins from air and nobody complained. Ripple created 100 billion coins from air and nobody complained. Tron, Stellar, Cardano, Iota, all in the billions. The top 1000 coins were created from air and nobody complained (most are scams). Why creating Tethers from thin air is now a cause of concern? That's a coin just like every coin out there, like Tron, Verge, EOS, they're created from nothing by a program, they have the value the market decides it has and the creator has all the right to print all the coins they want just like everybody else. And the market has decided USDT has more value than all other coins combined as it is number two in volume just behind BTC. People use USDT as a safe harbor when markets collapse, it has its use, a very valuable use. Of course they will print trillions if they could, everybody would print trillions of their shitty coins and cash out tanking the market if they could, that's the nature of cryptocurrencies. I fail to see why people complain about Tether (highly valuable) and not about the rest of the scam coins that are draining the market from stupid money.

lambda 8y ago
> Why creating Tethers from thin air is now a cause of concern? If you are claiming they are backed by USD, and you are creating them out of thin air, then that's a scam. Other coins are only valued based on how the market values them. There is no fraud there; you are not claiming that you will redeem them for something else, they just represent themselves and are valued based on how useful people find that particular kind of cryptocurrency, plus hype. MtGox was also a scam by the end, since they were trading on their exchange bitcoins and USD that they didn't actually have for people to cash out.
- dTal 8y ago
  >MtGox was also a scam by the end, since they were trading on their exchange bitcoins and USD that they didn't actually have for people to cash out. Heh. When a bitcoin exchange does it, it's a "scam". When a bank does it, it's "fractional reserve".
  - danharaj 8y ago
    Banks don't pretend that they're not fractional reserve.
    - kevingadd 8y ago
      Fractional reserve is also regulated and deposits are insured up to a certain amount, so it's definitely not comparable to printing imaginary USDT - even if fractional reserve banking has many well-known issues.
      - hapnin 8y ago
        That regulation didn't work so well 10 years ago. Regulation is for us, not the big dogs.
        jnwatson 8y ago
        It worked fine. I don’t know what you’re talking about.
        hapnin 8y ago
        Americans got screwed and no banking executives went to jail. It didn't work. It's one of the reasons Bitcoin was created, per the first transaction in the blockchain.
        s73v3r_ 8y ago
        No one really went to jail because they didn't break any laws. They fucked up, but not in an illegal manner.
        kevingadd 8y ago
        Fractional reserve banking is not what failed in the financial crisis. Multiple things failed, including credit ratings, mutual funds/pensions/etc investing in high risk investments, etc. The biggest risk people think of for fractional reserve - they won't have the money when you need it, a run on banks, etc - didn't really happen in the states in any significant fashion.
derivagral 8y ago
Tether posits that it is worth ~$1/Tether, backed by some mechanism that the exchange hasn't revealed. If you create Tether like any other coin, you probably aren't also creating $1 to correlate.
- celticninja 8y ago
  the idea being that you create new tether when someone deposits the same amount of USD and when USD is withdrawn from the loop then so should the same amount of tethers. What I dont see happening is the removal of tethers when the USD flows out of the crypto space. Enough people have taken profits at this stage that surely some of those USD should have been used to pay out early investors in BTC, thus some tethers would need to be destroyed to maintain parity. Bitfinex should not even be keeping tethers where they have paid out the USD as they can easily create more when new USD is deposited. if it is a scam I am impressed by how long they have managed to keep it going.
  - rtpg 8y ago
    You don't need the withdrawal step in the current market I buy BTC w/ USD Bitfinex prints USDT Bitfinex uses USDT to get BTC In the end of this operation bitfinex has the USD and everyone else is satisfied. Normally Bitfinex needs to hold onto it to settle USDT claims, but so long as there's a USDT-usable market this might not be necessary Even if USDT is at 50 cents to the dollar it's still a license to print money
    - celticninja 8y ago
      For every buyer there is a seller, bitfinex are not selling you the BTC. So that seller now wants to trade his USDT for USD to withdraw, whether he does that through bitfinex or another exchange using USDT, the end result should be an outflow of USD and a corresponding drop in the number of USDT.
      - seppel 8y ago
        Exactly, I'm wondering the same. Somebody bought 2.8 billion USDT and it is unclear who and why (to me).
Tesl 8y ago
Its not the same thing because exchanges often trade only Tether/Bitcoin pairs, and don't allow people to withdraw into actual USD. If you can print as many tethers as you like, then you can massively pump the bitcoin price buying it with worthless tether. This only works as long as people selling Bitcoin have been happy to accept Tether instead of USD, which (inexplicably to me) they have been doing. If Tether is proven to be backed by nothing at all, then there could be a serious crash as people try to get real money out and dump Tether. Your bitcoin being worth 7350 USDT isn't very exciting if your USDT are worth 0 USD.
- tripletao 8y ago
  What's inexplicable? Tether supplies real value, by allowing people to trade in USD without complying with American (or any other) banking law. And the alleged fraud is that they're creating USDT out of thin air, and spending them to buy BTC, in order to manipulate the price of Bitcoin upward. If you're a Bitcoin bull, then that's almost a selling point. I don't think any of this ends well, but I see the short-term appeal. People don't appreciate how slowly government works, especially on financial crimes. Liberty Reserve was blatantly illegal and technically simple, without even the blockchain fig leaf. It operated openly for seven years. Then the government arrested the founder, and sentenced him to twenty years in prison.
s73v3r_ 8y ago
"And the market has decided USDT has more value than all other coins combined as it is number two in volume just behind BTC." No, that just means that there's more of them.

lambda 8y ago

> Why creating Tethers from thin air is now a cause of concern? If you are claiming they are backed by USD, and you are creating them out of thin air, then that's a scam. Other coins are only valued based on how the market values them. There is no fraud there; you are not claiming that you will redeem them for something else, they just represent themselves and are valued based on how useful people find that particular kind of cryptocurrency, plus hype. MtGox was also a scam by the end, since they were trading on their exchange bitcoins and USD that they didn't actually have for people to cash out.

dTal 8y ago
>MtGox was also a scam by the end, since they were trading on their exchange bitcoins and USD that they didn't actually have for people to cash out. Heh. When a bitcoin exchange does it, it's a "scam". When a bank does it, it's "fractional reserve".
- danharaj 8y ago
  Banks don't pretend that they're not fractional reserve.
  - kevingadd 8y ago
    Fractional reserve is also regulated and deposits are insured up to a certain amount, so it's definitely not comparable to printing imaginary USDT - even if fractional reserve banking has many well-known issues.
    - hapnin 8y ago
      That regulation didn't work so well 10 years ago. Regulation is for us, not the big dogs.
      - jnwatson 8y ago
        It worked fine. I don’t know what you’re talking about.
        hapnin 8y ago
        Americans got screwed and no banking executives went to jail. It didn't work. It's one of the reasons Bitcoin was created, per the first transaction in the blockchain.
        s73v3r_ 8y ago
        No one really went to jail because they didn't break any laws. They fucked up, but not in an illegal manner.
        kevingadd 8y ago
        Fractional reserve banking is not what failed in the financial crisis. Multiple things failed, including credit ratings, mutual funds/pensions/etc investing in high risk investments, etc. The biggest risk people think of for fractional reserve - they won't have the money when you need it, a run on banks, etc - didn't really happen in the states in any significant fashion.

derivagral 8y ago

Tether posits that it is worth ~$1/Tether, backed by some mechanism that the exchange hasn't revealed. If you create Tether like any other coin, you probably aren't also creating $1 to correlate.

celticninja 8y ago
the idea being that you create new tether when someone deposits the same amount of USD and when USD is withdrawn from the loop then so should the same amount of tethers. What I dont see happening is the removal of tethers when the USD flows out of the crypto space. Enough people have taken profits at this stage that surely some of those USD should have been used to pay out early investors in BTC, thus some tethers would need to be destroyed to maintain parity. Bitfinex should not even be keeping tethers where they have paid out the USD as they can easily create more when new USD is deposited. if it is a scam I am impressed by how long they have managed to keep it going.
- rtpg 8y ago
  You don't need the withdrawal step in the current market I buy BTC w/ USD Bitfinex prints USDT Bitfinex uses USDT to get BTC In the end of this operation bitfinex has the USD and everyone else is satisfied. Normally Bitfinex needs to hold onto it to settle USDT claims, but so long as there's a USDT-usable market this might not be necessary Even if USDT is at 50 cents to the dollar it's still a license to print money
  - celticninja 8y ago
    For every buyer there is a seller, bitfinex are not selling you the BTC. So that seller now wants to trade his USDT for USD to withdraw, whether he does that through bitfinex or another exchange using USDT, the end result should be an outflow of USD and a corresponding drop in the number of USDT.
    - seppel 8y ago
      Exactly, I'm wondering the same. Somebody bought 2.8 billion USDT and it is unclear who and why (to me).

Tesl 8y ago

Its not the same thing because exchanges often trade only Tether/Bitcoin pairs, and don't allow people to withdraw into actual USD. If you can print as many tethers as you like, then you can massively pump the bitcoin price buying it with worthless tether. This only works as long as people selling Bitcoin have been happy to accept Tether instead of USD, which (inexplicably to me) they have been doing. If Tether is proven to be backed by nothing at all, then there could be a serious crash as people try to get real money out and dump Tether. Your bitcoin being worth 7350 USDT isn't very exciting if your USDT are worth 0 USD.

tripletao 8y ago
What's inexplicable? Tether supplies real value, by allowing people to trade in USD without complying with American (or any other) banking law. And the alleged fraud is that they're creating USDT out of thin air, and spending them to buy BTC, in order to manipulate the price of Bitcoin upward. If you're a Bitcoin bull, then that's almost a selling point. I don't think any of this ends well, but I see the short-term appeal. People don't appreciate how slowly government works, especially on financial crimes. Liberty Reserve was blatantly illegal and technically simple, without even the blockchain fig leaf. It operated openly for seven years. Then the government arrested the founder, and sentenced him to twenty years in prison.

s73v3r_ 8y ago

"And the market has decided USDT has more value than all other coins combined as it is number two in volume just behind BTC." No, that just means that there's more of them.