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You can create Tether out of thin air and use it to move the market in a favourable direction.

by imeron 8y ago

mtgx 8y ago
But assuming Tether was legitimate, wouldn't they also need to create new Tether units during extreme market crashes because that's when the highest demand for Tether would be, so they'd run out of the existing Tether? They wouldn't need to create new Tether during bull runs, because nobody cares about putting their money into Tether then.
- laken 8y ago
  Day traders use Tether a lot, even during bull runs. Because the market never closes, many full-time traders put their crypto all into tether when they're done trading for the day.
  - vkou 8y ago
    Why not just put it into USD when they are done for the day?
    - fastball 8y ago
      Crypto/Fiat transactions are much more expensive than Crpyto/Crypto transactions. Why impact your bottom line if you don't need to?
      - laken 8y ago
        In addition, it's more "liquid" too. It's easier to turn tether into pretty much any altcoin on most exchanges vs turning USD back into altcoins. There's still a belief in some circles too that a crypto/crypto transaction isn't a taxable event, which isn't true anymore. Regardless, some either believe this or know it's not true but find it easier to tax-evade this way.
        ska 8y ago
        which isn't true anymore It's hard to argue it was ever true, or ever likely to have been treated as such.
      - vkou 8y ago
        Why is exchanging 1 BTC into 10,000 USD on an exchange more expensive then exchanging 1 BTC into 10,000 USDT - as long as you don't withdraw it? Is it because you don't trust the exchange to honor your USD withdrawal the next morning? What makes you trust that Bitfinex is more likely to honor USDT to USD exchanges the next morning? It's almost certain that USDT isn't actually backed 1:1 by USD. If it were, it would be trivially auditable. You're just moving yourself from one category of potential risk (Your exchange steals your USD), into a category of almost certain risk (The shoe drops and we discover that USDT was a scam all along.)
    - cdiddy2 8y ago
      a lot of exchanges don't support USD conversion due to increased hassle of dealing with the dollar/us gov regulations. its easier to be a crypto only exchange than a crypto/fiat exchange
- bripeace 8y ago
  No, it's unlikely if Tether was legitimate USDT printing would correlate so closely with bitcoin (crypto) market downturns. The reason being, assuming tether is legitimate, for every printing they are sourcing additional USD to back the newly minted USDT. The idea they could so consistently find large investors willing to make NEW 100M+ investments while the crypto markets were in free fall is unlikely to say the least. And it's not as if that's the only complaints about Tether. The fact Bitfinex and Tether has the same management; USDT pretty much acts as a proxy for Bitfinex to maneuver around banking laws; and that USDT supply pretty much grows monotonically are just a few of the other issues that suggest Tether is not legit.
  - sunsu 8y ago
    This is inaccurate. Tether demand INCREASES when the cryptomarkets crash because traders want to escape to non-volatile assets. If everyone converts their crypto to USDT at the same time (which is what happens during big crashes) they MUST print more Tether or the price will increase.
    - Nursie 8y ago
      > If everyone converts their crypto to USDT at the same time (which is what happens during big crashes) they MUST print more Tether or the price will increase. This doesn't make sense. You don't "convert" other cryptocurrencies to USDT, you sell your cryptocurrencies to people who have USDT. If there's a big sell pressure on the cryptocurrency, people want to move back to dollars, and there are not enough USD(T) then the price of the cryptocurrency should come down. By adding more USDT to the picture you're magicking up money out of thin air to prop up a price. You're basically saying that when people want to sell cryptocurrency, dollars should be brought into existence to facilitate this at their preferred price.
      - sunsu 8y ago
        It makes perfect sense. If many people are trying to BUY USDT (increasing demand for USDT) the price of USDT will increase. Tether tries to prevent this by printing more USDT (increasing supply). They are not "magicking" Dollars, they are magicking a commodity (USDT) pegged to Dollar. I'm not saying that I'm a big Tether fan or anything. However to say that it "doesn't make sense" when they print more Tether during market crashes is false.
- dragonwriter 8y ago
  > But assuming Tether was legitimate, wouldn't they also need to create new Tether units during extreme market crashes because that's when the highest demand for Tether would be, so they'd run out of the existing Tether? BTC crashes inherently would create BTC -> USDT interest, sure, but not inherently create USD availability for backing new USDT. Creation of legitimate USDT would mainly seem to happen when there is high USD -> BTC interest, because that is, in many cases, realized by USD -> USDT conversion (with, in principle, the USDT created at that time and the USD in reserve backing the new USDT) followed by USDT -> BTC exchange. You might see new legitimate, large-scale USDT creation in a crash if, say, bargain-hunting new USD money is flowing into BTC, but the people exiting BTC and driving the price down are holding USDT without converting to USD. > They wouldn't need to create new Tether during bull runs, because nobody cares about putting their money into Tether then. Yes, they would, unless “bull runs” in the USDT-denominated BTC market are just money already held in USDT rushing back into BTC, rather than new USD flowing into the USDT/BTC market.

You can create Tether out of thin air and use it to move the market in a favourable direction.

by imeron 8y ago

You can create Tether out of thin air and use it to move the market in a favourable direction.

mtgx 8y ago

But assuming Tether was legitimate, wouldn't they also need to create new Tether units during extreme market crashes because that's when the highest demand for Tether would be, so they'd run out of the existing Tether? They wouldn't need to create new Tether during bull runs, because nobody cares about putting their money into Tether then.

laken 8y ago
Day traders use Tether a lot, even during bull runs. Because the market never closes, many full-time traders put their crypto all into tether when they're done trading for the day.
- vkou 8y ago
  Why not just put it into USD when they are done for the day?
  - fastball 8y ago
    Crypto/Fiat transactions are much more expensive than Crpyto/Crypto transactions. Why impact your bottom line if you don't need to?
    - laken 8y ago
      In addition, it's more "liquid" too. It's easier to turn tether into pretty much any altcoin on most exchanges vs turning USD back into altcoins. There's still a belief in some circles too that a crypto/crypto transaction isn't a taxable event, which isn't true anymore. Regardless, some either believe this or know it's not true but find it easier to tax-evade this way.
      - ska 8y ago
        which isn't true anymore It's hard to argue it was ever true, or ever likely to have been treated as such.
    - vkou 8y ago
      Why is exchanging 1 BTC into 10,000 USD on an exchange more expensive then exchanging 1 BTC into 10,000 USDT - as long as you don't withdraw it? Is it because you don't trust the exchange to honor your USD withdrawal the next morning? What makes you trust that Bitfinex is more likely to honor USDT to USD exchanges the next morning? It's almost certain that USDT isn't actually backed 1:1 by USD. If it were, it would be trivially auditable. You're just moving yourself from one category of potential risk (Your exchange steals your USD), into a category of almost certain risk (The shoe drops and we discover that USDT was a scam all along.)
  - cdiddy2 8y ago
    a lot of exchanges don't support USD conversion due to increased hassle of dealing with the dollar/us gov regulations. its easier to be a crypto only exchange than a crypto/fiat exchange
bripeace 8y ago
No, it's unlikely if Tether was legitimate USDT printing would correlate so closely with bitcoin (crypto) market downturns. The reason being, assuming tether is legitimate, for every printing they are sourcing additional USD to back the newly minted USDT. The idea they could so consistently find large investors willing to make NEW 100M+ investments while the crypto markets were in free fall is unlikely to say the least. And it's not as if that's the only complaints about Tether. The fact Bitfinex and Tether has the same management; USDT pretty much acts as a proxy for Bitfinex to maneuver around banking laws; and that USDT supply pretty much grows monotonically are just a few of the other issues that suggest Tether is not legit.
- sunsu 8y ago
  This is inaccurate. Tether demand INCREASES when the cryptomarkets crash because traders want to escape to non-volatile assets. If everyone converts their crypto to USDT at the same time (which is what happens during big crashes) they MUST print more Tether or the price will increase.
  - Nursie 8y ago
    > If everyone converts their crypto to USDT at the same time (which is what happens during big crashes) they MUST print more Tether or the price will increase. This doesn't make sense. You don't "convert" other cryptocurrencies to USDT, you sell your cryptocurrencies to people who have USDT. If there's a big sell pressure on the cryptocurrency, people want to move back to dollars, and there are not enough USD(T) then the price of the cryptocurrency should come down. By adding more USDT to the picture you're magicking up money out of thin air to prop up a price. You're basically saying that when people want to sell cryptocurrency, dollars should be brought into existence to facilitate this at their preferred price.
    - sunsu 8y ago
      It makes perfect sense. If many people are trying to BUY USDT (increasing demand for USDT) the price of USDT will increase. Tether tries to prevent this by printing more USDT (increasing supply). They are not "magicking" Dollars, they are magicking a commodity (USDT) pegged to Dollar. I'm not saying that I'm a big Tether fan or anything. However to say that it "doesn't make sense" when they print more Tether during market crashes is false.
dragonwriter 8y ago
> But assuming Tether was legitimate, wouldn't they also need to create new Tether units during extreme market crashes because that's when the highest demand for Tether would be, so they'd run out of the existing Tether? BTC crashes inherently would create BTC -> USDT interest, sure, but not inherently create USD availability for backing new USDT. Creation of legitimate USDT would mainly seem to happen when there is high USD -> BTC interest, because that is, in many cases, realized by USD -> USDT conversion (with, in principle, the USDT created at that time and the USD in reserve backing the new USDT) followed by USDT -> BTC exchange. You might see new legitimate, large-scale USDT creation in a crash if, say, bargain-hunting new USD money is flowing into BTC, but the people exiting BTC and driving the price down are holding USDT without converting to USD. > They wouldn't need to create new Tether during bull runs, because nobody cares about putting their money into Tether then. Yes, they would, unless “bull runs” in the USDT-denominated BTC market are just money already held in USDT rushing back into BTC, rather than new USD flowing into the USDT/BTC market.