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Gemini created an audited, 100% reserve stablecoin; no one uses it. This suggests that there is no genuine demand for stablecoins and that Tether has been entir

by juped 7y ago

Gemini created an audited, 100% reserve stablecoin; no one uses it. This suggests that there is no genuine demand for stablecoins and that Tether has been entirely scam and hype driven. Dollar amounts in a litigation complaint and headlines about "sued for $X million!" are not usually that meaningful; remember your Gell-Mann amnesia.

eindiran 7y ago
Admittedly, I believe Gemini released their stablecoin well after the end of the 2017 bull cryptocurrency market. It was much easier to get people to try your shitty new coin in 2017 than it is now, so demand for any new coin will be lower. I agree that Tether was a hype-driven scam, but I don't think the relative unpopularity of the Gemini stablecoin reveals that.
lacker 7y ago
This suggests that there is no genuine demand for stablecoins That just suggests that "audited" and "100% reserve" are not the most important features to people using stablecoins. What is more important is having a deep market on Binance, which is where most BTC <-> stablecoin trading happens. Despite these terrible news articles, which are indeed reporting accurately that there are terrible flaws in Tether, you can still trade Tether for $1 right now. A hundred dollars worth of Tether is still more valuable than a hundred dollar payment made via a credit card.
- teej 7y ago
  > What is more important is having a deep market on Binance It sounds like you are arguing that being popular is what matters more to being popular
  - hanniabu 7y ago
    Yes, and being where the users are being available for users to use it without performing KYC.
  - deleted 7y ago
    [deleted]
  - lacker 7y ago
    Well, yes. There are huge network effects for stablecoins. Let's go for a more specific example. Let's say that you hold one bitcoin on Binance, and you believe the price of bitcoin will go down today. You would like to exchange your bitcoin for dollars, and then tomorrow, exchange your dollars back into bitcoin. Ideally you would just use plain old US dollars. But since it's crypto, you can't. What you can have is a stablecoin. So which stablecoin should you use? There are two costs to using a stablecoin. Cost #1 is that when you exchange, you won't get the perfect rate. You'll have to pay some fee, and the precise exchange rate you get will depend on the liquidity of the market. Cost #2 is the chance that this stablecoin collapses in value while you're using it. For Tether, in my opinion cost #2 is high. All these dubious stories about the underpinning of Tether are true. That means the risk it collapses tomorrow are higher than the risks that other stablecoins collapse tomorrow. However, cost #1 is probably lower for Tether than it is for any other stablecoin. Because there are more traders operating in Tether, you get a better exchange rate. This is why Tether isn't just hype, it is providing real value to people through being the most popular stablecoin. Would we be better off in a world where the most popular stablecoin also had a solid financial backing? Yeah, I think so. But that isn't the same as saying that Tether has no utility today.
    - sjy 7y ago
      > Ideally you would just use plain old US dollars. But since it's crypto, you can't. Because unbanked cryptocurrency exchanges are essentially in the business of money laundering. A service that facilitates illegal transactions has obvious value to any libertarian or criminal, but I’m not sure that counts as “providing real value to people.”
    - vkou 7y ago
      Why not just use a reputable exchange, which actually lets you exchange your BTC into real dollars, as opposed to funny money dollars, like Coinbase? I understand why a money launderer wants to trade on an exchange which does not let them withdraw USD. But why would a normie (who, at some point, wants USD) want to do so?
      - lacker 7y ago
- JumpCrisscross 7y ago
  > you can still trade Tether for $1 right now Aren't stories [1] about withdrawals being delayed or unreasonably conditioned abundant? [1] https://tether.to/announcement/ https://tether.to/announcement/
  - lacker 7y ago
    That's just for interactions with the company behind Tether itself. That isn't how most people exchange their USDT. The most common way to get rid of USDT is to exchange it on Binance, where the market for Tether is very liquid, and the going rate as I write this is right around one dollar. Plenty of other exchanges besides Binance too. See: https://coinmarketcap.com/currencies/tether/ https://coinmarketcap.com/currencies/tether/
    - JumpCrisscross 7y ago
      > The most common way to get rid of USDT is to exchange it on Binance Exchange it for what? If you exchange it for a record entry for anything (whether dollars or Bitcoin) in a Binance (or affiliate's) account, you're exchanging one IOU for another. Given most USDT trades on Binance and its affiliated entities, this loops right back to the withdrawal problem. A "stable" coin that cannot be readily redeemed and is not fully reserved is a Ponzi scheme with extra steps.
      - ChainOfFools 7y ago
        > A "stable" coin that cannot be readily redeemed and is not fully reserved is a Ponzi scheme with extra steps. Extra steps, and the delay they introduce, may be all a ponzi needs to sustain itself sufficiently to permit quiet exits. That the market will eventually be consistent is, alas, not the current manipulators' problem.
      - lacker 7y ago
        USDT is most commonly exchanged for Bitcoin. You can withdraw the Bitcoin from Binance to your own wallet, so you aren't really "exchanging one IOU for another". There are plenty of valid criticisms of USDT. Saying that it is hard to exchange 1 USDT for a dollar's worth of Bitcoin that you control is not one of them.
- jki275 7y ago
  Well, clearly Tether will take your $1 and issue you USDT. The problem is that for the most part, you cannot get that dollar back for it. 100 units of USDT is worth $100 only if you can get someone to trade it to for that. For the moment, you actually cannot -- you have to trade it through BTC or one of the other crypto coins that are actually paired with USD first.
  - lacker 7y ago
    You do have to trade it on an exchange to get the value, I just mean that right now one USDT is trading for right around $1. https://coinmarketcap.com/currencies/tether/ https://coinmarketcap.com/currencies/tether/
    - jki275 7y ago
      You can't though. That's the problem. Nobody will actually exchange USDT for USD 1-1 unless something has changed very recently.
      - jwinterm 7y ago
        This market has been operational for a couple years now I think: https://trade.kraken.com/markets/kraken/usdt/usd https://trade.kraken.com/markets/kraken/usdt/usd That is a San Francisco based exchange with USD deposits and withdrawals. There's been a couple times where tether has been under a dollar during times of high uncertainty (and I think relatively low liquidity of this trading pair), but generally you can trade tether for USD and withdraw here.
        jki275 7y ago
        Interesting to see that it exists -- I know there was a great deal of controversy over the fact that Tether would not redeem them ever. The order book there is awfully thin for an asset worth the billions USDT is supposed to be though.
      - lacker 7y ago
- api 7y ago
  Maybe the most important feature is related to Tether's uses as a criminal money laundering vehicle? Maybe Tether's sketchiness is a feature, not a bug, at least to its users.
BitwiseFool 7y ago
This is purely anecdotal but as a Gemini user I'd use their stable coin if it was accepted on any of the other exchanges I use. I'd actually prefer to use it to buy altcoins than to use a BTC/ALT pair.
- juped 7y ago
  Likewise. But the demand side isn't us, it's exchanges.
- companyhen 7y ago
  Same here. If Gemini offered DAI I'd be more likely to purchase it but GUSD only has a small amount of 3rd party services using it. The only one I can think of is BlockFi right now.
lmpostor 7y ago
Isn't there 400m+ of audited USDC in circulation?
- TylerE 7y ago
  USDC: $447M market cap, $277M volume USDT: $4.1B market cap, $28.1B volume
  - lmpostor 7y ago
    Since November 18, just saying that is a far cry from "no demand" as stated by the top comment.
    - TylerE 7y ago
      No, those are daily volumes. Tether out-transacts it 100:1
      - lmpostor 7y ago
        It doesn't, exchange data is heavily manipulated in order to game certain resources like coinmarketcap, coingecko etc. I would agree tether is more but nowhere close to as described. Dividing by a factor of 10 wouldn't even be enough imo.
shiado 7y ago
Most cryptocurrency activity occurs outside of the USA, is it any surprise that an American created stablecoin with severe risks due to its American ties is frowned upon by those trading cryptocurrencies? Avoiding the regulatory hell of Americans who think they control the entire planet is one of the primary purposes of stablecoins.
jMyles 7y ago
> Gemini created an audited, 100% reserve stablecoin; no one uses it. This suggests that there is no genuine demand for stablecoins How then do you explain DAI? It seems to me that people don't want an "audited, 100% reserve stablecoin", they want an algorithmic, decentralized stablecoin that can't be screwed up because somebody seized the "100% reserve."

by juped 7y ago

eindiran 7y ago

Admittedly, I believe Gemini released their stablecoin well after the end of the 2017 bull cryptocurrency market. It was much easier to get people to try your shitty new coin in 2017 than it is now, so demand for any new coin will be lower. I agree that Tether was a hype-driven scam, but I don't think the relative unpopularity of the Gemini stablecoin reveals that.

lacker 7y ago

This suggests that there is no genuine demand for stablecoins That just suggests that "audited" and "100% reserve" are not the most important features to people using stablecoins. What is more important is having a deep market on Binance, which is where most BTC <-> stablecoin trading happens. Despite these terrible news articles, which are indeed reporting accurately that there are terrible flaws in Tether, you can still trade Tether for $1 right now. A hundred dollars worth of Tether is still more valuable than a hundred dollar payment made via a credit card.

teej 7y ago
> What is more important is having a deep market on Binance It sounds like you are arguing that being popular is what matters more to being popular
- hanniabu 7y ago
  Yes, and being where the users are being available for users to use it without performing KYC.
- deleted 7y ago
  [deleted]
- lacker 7y ago
  Well, yes. There are huge network effects for stablecoins. Let's go for a more specific example. Let's say that you hold one bitcoin on Binance, and you believe the price of bitcoin will go down today. You would like to exchange your bitcoin for dollars, and then tomorrow, exchange your dollars back into bitcoin. Ideally you would just use plain old US dollars. But since it's crypto, you can't. What you can have is a stablecoin. So which stablecoin should you use? There are two costs to using a stablecoin. Cost #1 is that when you exchange, you won't get the perfect rate. You'll have to pay some fee, and the precise exchange rate you get will depend on the liquidity of the market. Cost #2 is the chance that this stablecoin collapses in value while you're using it. For Tether, in my opinion cost #2 is high. All these dubious stories about the underpinning of Tether are true. That means the risk it collapses tomorrow are higher than the risks that other stablecoins collapse tomorrow. However, cost #1 is probably lower for Tether than it is for any other stablecoin. Because there are more traders operating in Tether, you get a better exchange rate. This is why Tether isn't just hype, it is providing real value to people through being the most popular stablecoin. Would we be better off in a world where the most popular stablecoin also had a solid financial backing? Yeah, I think so. But that isn't the same as saying that Tether has no utility today.
  - sjy 7y ago
    > Ideally you would just use plain old US dollars. But since it's crypto, you can't. Because unbanked cryptocurrency exchanges are essentially in the business of money laundering. A service that facilitates illegal transactions has obvious value to any libertarian or criminal, but I’m not sure that counts as “providing real value to people.”
  - vkou 7y ago
    Why not just use a reputable exchange, which actually lets you exchange your BTC into real dollars, as opposed to funny money dollars, like Coinbase? I understand why a money launderer wants to trade on an exchange which does not let them withdraw USD. But why would a normie (who, at some point, wants USD) want to do so?
    - lacker 7y ago
JumpCrisscross 7y ago
> you can still trade Tether for $1 right now Aren't stories [1] about withdrawals being delayed or unreasonably conditioned abundant? [1] https://tether.to/announcement/ https://tether.to/announcement/
- lacker 7y ago
  That's just for interactions with the company behind Tether itself. That isn't how most people exchange their USDT. The most common way to get rid of USDT is to exchange it on Binance, where the market for Tether is very liquid, and the going rate as I write this is right around one dollar. Plenty of other exchanges besides Binance too. See: https://coinmarketcap.com/currencies/tether/ https://coinmarketcap.com/currencies/tether/
  - JumpCrisscross 7y ago
    > The most common way to get rid of USDT is to exchange it on Binance Exchange it for what? If you exchange it for a record entry for anything (whether dollars or Bitcoin) in a Binance (or affiliate's) account, you're exchanging one IOU for another. Given most USDT trades on Binance and its affiliated entities, this loops right back to the withdrawal problem. A "stable" coin that cannot be readily redeemed and is not fully reserved is a Ponzi scheme with extra steps.
    - ChainOfFools 7y ago
      > A "stable" coin that cannot be readily redeemed and is not fully reserved is a Ponzi scheme with extra steps. Extra steps, and the delay they introduce, may be all a ponzi needs to sustain itself sufficiently to permit quiet exits. That the market will eventually be consistent is, alas, not the current manipulators' problem.
    - lacker 7y ago
      USDT is most commonly exchanged for Bitcoin. You can withdraw the Bitcoin from Binance to your own wallet, so you aren't really "exchanging one IOU for another". There are plenty of valid criticisms of USDT. Saying that it is hard to exchange 1 USDT for a dollar's worth of Bitcoin that you control is not one of them.
jki275 7y ago
Well, clearly Tether will take your $1 and issue you USDT. The problem is that for the most part, you cannot get that dollar back for it. 100 units of USDT is worth $100 only if you can get someone to trade it to for that. For the moment, you actually cannot -- you have to trade it through BTC or one of the other crypto coins that are actually paired with USD first.
- lacker 7y ago
  You do have to trade it on an exchange to get the value, I just mean that right now one USDT is trading for right around $1. https://coinmarketcap.com/currencies/tether/ https://coinmarketcap.com/currencies/tether/
  - jki275 7y ago
    You can't though. That's the problem. Nobody will actually exchange USDT for USD 1-1 unless something has changed very recently.
    - jwinterm 7y ago
      This market has been operational for a couple years now I think: https://trade.kraken.com/markets/kraken/usdt/usd https://trade.kraken.com/markets/kraken/usdt/usd That is a San Francisco based exchange with USD deposits and withdrawals. There's been a couple times where tether has been under a dollar during times of high uncertainty (and I think relatively low liquidity of this trading pair), but generally you can trade tether for USD and withdraw here.
      - jki275 7y ago
        Interesting to see that it exists -- I know there was a great deal of controversy over the fact that Tether would not redeem them ever. The order book there is awfully thin for an asset worth the billions USDT is supposed to be though.
    - lacker 7y ago
api 7y ago
Maybe the most important feature is related to Tether's uses as a criminal money laundering vehicle? Maybe Tether's sketchiness is a feature, not a bug, at least to its users.

BitwiseFool 7y ago

This is purely anecdotal but as a Gemini user I'd use their stable coin if it was accepted on any of the other exchanges I use. I'd actually prefer to use it to buy altcoins than to use a BTC/ALT pair.

juped 7y ago
Likewise. But the demand side isn't us, it's exchanges.
companyhen 7y ago
Same here. If Gemini offered DAI I'd be more likely to purchase it but GUSD only has a small amount of 3rd party services using it. The only one I can think of is BlockFi right now.

lmpostor 7y ago

Isn't there 400m+ of audited USDC in circulation?

TylerE 7y ago
USDC: $447M market cap, $277M volume USDT: $4.1B market cap, $28.1B volume
- lmpostor 7y ago
  Since November 18, just saying that is a far cry from "no demand" as stated by the top comment.
  - TylerE 7y ago
    No, those are daily volumes. Tether out-transacts it 100:1
    - lmpostor 7y ago
      It doesn't, exchange data is heavily manipulated in order to game certain resources like coinmarketcap, coingecko etc. I would agree tether is more but nowhere close to as described. Dividing by a factor of 10 wouldn't even be enough imo.

shiado 7y ago

Most cryptocurrency activity occurs outside of the USA, is it any surprise that an American created stablecoin with severe risks due to its American ties is frowned upon by those trading cryptocurrencies? Avoiding the regulatory hell of Americans who think they control the entire planet is one of the primary purposes of stablecoins.

jMyles 7y ago

> Gemini created an audited, 100% reserve stablecoin; no one uses it. This suggests that there is no genuine demand for stablecoins How then do you explain DAI? It seems to me that people don't want an "audited, 100% reserve stablecoin", they want an algorithmic, decentralized stablecoin that can't be screwed up because somebody seized the "100% reserve."