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Tether promised that 1 USDT would be backed by 1 USD, and they would always honor a 1:1 exchange rate. Now it turns out that USDT are not backed by USD, and Tet
by biggestdecision 7y ago
Tether promised that 1 USDT would be backed by 1 USD, and they would always honor a 1:1 exchange rate. Now it turns out that USDT are not backed by USD, and Tether will not exchange between the two. You are reliant on third party exchange services, that don't guarantee the exchange rate.
Traditional banking services are hostile to crypto, so they cut off Tether's ability to trade in USD. And Tethers own interest (widespread use of USDT) is at odds with their inability to provide adequate backing USD. Exchanges all wanted more USDT to provide more liquidity, and so Tether just printed USDT without backing.
A crypto backed 1:1 by USD is a great idea, the trick is finding a way to actually guarantee the backing currency & exchange rate.
- tptacek 7y agoIs it a great idea? Or does it not reliably exist for a reason: because it's in tension with banking regulations, and anyone who tries to do it without applying all the same KYC and AML regs that motivate stablecoins in the first place are going to be frozen out the same way Bitfinex was, to the point where they too will end up pitifully reliant on money laundering firms opening fleets of fraudulent accounts at tiny banks?
- seibelj 7y agoUSDC from ycombinator-funded Coinbase is doing fine https://www.coinbase.com/usdc https://www.coinbase.com/usdc But the same old tropes about crypto always get the upvotes.
- papln 7y agoHow is USDC operation financed? Is it a marketing expense of Coinbase? Is "Convert USDC at a ratio of US$1.00 for 1 USDC with no fees" expected to change to a fee in the future?
- nostrademons 7y agoLoss leader to get you to trade more. The existence of USDC makes it easier to move in and out of crypto positions, and to send crypto to other exchanges without taking on exchange-rate risks. Coinbase's business model is to take a fee whenever you transact. The more transactions you make, the more money they make. It's similar to Google's "make the web faster" efforts (Chrome, V8, AMP, mod_pagespeed, hosting JQuery & other AJAX libs, developer education). If the web is faster, you visit more pages. If you visit more pages, you search more. If you search more, you click on more ads, which makes Google more money.
- xyzzyz 7y agoA crypto backed 1:1 by USD is a great idea, the trick is finding a way to actually guarantee the backing currency & exchange rate. It's actually pretty lousy idea, because in practice it's exactly what we already have in normal banking system, where the "bank-USD crypto", that is, the numbers in your bank accounts, are already backed 1:1 by actual government USD, with government regulations backing the companies and the exchange rate. If you can freely exchange cryptocoins to USD, there's absolutely no reason to ever consider a stablecoin, unless your goal is to evade money laundering, KYC, etc regulations, hence Tether.
- gnode 7y ago> there's absolutely no reason to ever consider a stablecoin Although Tether's purpose has largely been to avoid regulation, and participate in cryptocurrency speculation, a stablecoin would be superior for actual commerce. Bitcoin has failed for commerce, to some extent because of instability and speculation. Being able to use something equivalent to cash to transact digitally, with client-side security seems like a desirable technology to me.
- deleted 7y ago[deleted]
- xyzzyz 7y agostablecoin would be superior for actual commerce Superior to bitcoin, surely, but no superior to dollars. I have absolutely no difficulty with using my dollars to pay for anything I want. The biggest reason one might not want to use dollars is to conceal one's identity, and while I admit that there exist valid uses for that, most of the market for anonymous commerce is illegal activity.
- edmundsauto 7y agoA lot of people don't use dollars, and/or find the USD/$local_currency exchange process cumbersome and expensive.