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>The Tether company does not offer this service, which is incredible. How does sending to a Bank Account work, then? Do banks take Tether now?

b1daly 8y ago
I’m just a casual observer of the market, so I only know what can glean on the internet. My observations are purely anecdotal. A fundamental problem, in the entire “crypto” market is that it’s hard to get dollars to crypto exchanges. As far as I can tell, this difficulty is asymmetric: it’s harder to get dollars out of exchanges than it is to deposit. In either case, it is hard to get an account with an exchange that can handle dollars, if you are not willing able to jump through the hoops of AML and KYC regulations. Even if you are, exchanges like Coinbase (regulated, in US) or Bitfinex (unregulated, located god knows where) present significant friction in actually transacting with dollars. (See the relevant reddit forums). In addition, transferring dollars internationally is costly. So, somewhere, people exchange their dollars for bitcoin, or whatever. They can then easily transfer these digital tokens to any exchange, even those that don’t use dollars (which are many). When such a user wants to avoid exposure, they can sell their bitcoin for tethers, which they can hold or transfer between exchanges. The question is where this Tether comes from. It enters the system via Bitfinex, who generates the tether token (their sister company manages the network and creation/destruction of tethers). What people are suspicious of, is that Tether is generating tokens at will. They can then use these tokens to exchange for real bitcoins. They then avail themselves of whatever actual points of exchange they can to obtain real currency. Or they can just trade the bitcoin. The point is, in a panic sell situation, the exits are very blocked. If you hold your own tokens (off exchange) you will be that much more screwed, as these blockchain based networks breakdown under load. In some ways, maybe this lack of liquidity helps stabilize prices. But the total crypto “market cap” is at least an order of magnitude greater than the total dollars invested. (This is a hard concept to grasp, essentially it is the sum of the last price paid for all tokens in the market place.) If tether is being is being generated without dollars to back it, that means there is even less real liquidity in the market, and “Tether Inc” is scamming everyone buy siphoning of some of the real demand for crypto coins. These digital “currencies” have so far only shown utility as a pure commodity for speculation. This is all mathematically trivial to see. The thing that many skeptical market observers wonder is why the “bubble” hasn’t totally deflated. Bitcoin has shown surprising price stability between $6-8k for a few months. There is speculation that market manipulation is the thing providing the support, including the shenanigans of Bitfinex and Tether. Bottom line is that this is a (sub) zero sum game. Any dollars won have a balancing loss from another player. It seems highly likely that this already highly risky game is being “games” by entities that play dirty.
- windows_tips 8y ago
  Why do you think Tether is being generated without backing dollars? Have you seen their Transparency[0] page? [0] https://wallet.tether.to/transparency https://wallet.tether.to/transparency

b1daly 8y ago

I’m just a casual observer of the market, so I only know what can glean on the internet. My observations are purely anecdotal. A fundamental problem, in the entire “crypto” market is that it’s hard to get dollars to crypto exchanges. As far as I can tell, this difficulty is asymmetric: it’s harder to get dollars out of exchanges than it is to deposit. In either case, it is hard to get an account with an exchange that can handle dollars, if you are not willing able to jump through the hoops of AML and KYC regulations. Even if you are, exchanges like Coinbase (regulated, in US) or Bitfinex (unregulated, located god knows where) present significant friction in actually transacting with dollars. (See the relevant reddit forums). In addition, transferring dollars internationally is costly. So, somewhere, people exchange their dollars for bitcoin, or whatever. They can then easily transfer these digital tokens to any exchange, even those that don’t use dollars (which are many). When such a user wants to avoid exposure, they can sell their bitcoin for tethers, which they can hold or transfer between exchanges. The question is where this Tether comes from. It enters the system via Bitfinex, who generates the tether token (their sister company manages the network and creation/destruction of tethers). What people are suspicious of, is that Tether is generating tokens at will. They can then use these tokens to exchange for real bitcoins. They then avail themselves of whatever actual points of exchange they can to obtain real currency. Or they can just trade the bitcoin. The point is, in a panic sell situation, the exits are very blocked. If you hold your own tokens (off exchange) you will be that much more screwed, as these blockchain based networks breakdown under load. In some ways, maybe this lack of liquidity helps stabilize prices. But the total crypto “market cap” is at least an order of magnitude greater than the total dollars invested. (This is a hard concept to grasp, essentially it is the sum of the last price paid for all tokens in the market place.) If tether is being is being generated without dollars to back it, that means there is even less real liquidity in the market, and “Tether Inc” is scamming everyone buy siphoning of some of the real demand for crypto coins. These digital “currencies” have so far only shown utility as a pure commodity for speculation. This is all mathematically trivial to see. The thing that many skeptical market observers wonder is why the “bubble” hasn’t totally deflated. Bitcoin has shown surprising price stability between $6-8k for a few months. There is speculation that market manipulation is the thing providing the support, including the shenanigans of Bitfinex and Tether. Bottom line is that this is a (sub) zero sum game. Any dollars won have a balancing loss from another player. It seems highly likely that this already highly risky game is being “games” by entities that play dirty.

windows_tips 8y ago
Why do you think Tether is being generated without backing dollars? Have you seen their Transparency[0] page? [0] https://wallet.tether.to/transparency https://wallet.tether.to/transparency