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I have the same question. The only answer I can think of, is people that want to get out of Bitcoin but aren’t able to sell for real USD because of AML / tax pu

by zaroth 6y ago

I have the same question. The only answer I can think of, is people that want to get out of Bitcoin but aren’t able to sell for real USD because of AML / tax purposes. Even if the tether is only worth $0.70 it’s still a better deal for some people who can’t exit their BTC position legally. It still doesn’t really explain who is holding almost $20 billion of Tether though.

seppel 6y ago
> Even if the tether is only worth $0.70 it’s still a better deal for some people who can’t exit their BTC position legally. I don't get this part. What can you buy using tether, even if it is worth only $0.70? (Well, obviously you can buy bitcoin but this doesnt make any sense to buy the bitcoin back that you just sold. What else can you buy?)
- raziel2701 6y ago
  You can trade tether for other crypto in some exchanges.
  - seppel 6y ago
    Yes but then someone else has the tether.
Danieru 6y ago
Tether's biggest holders presumably are people with cash balances at exchanges without us dollar banking. At such exchanges the account will show USD not tether.
rabf 6y ago
One large use for Tether is transferring value either for abitrage or to buy assets on another exchange not available on your current exchange. Sending real USD via the banking system could take weeks whereas sending Tether will take minutes. Also if Tether is trading below $1, Tether (the company) could buy them back and burn them for profit, assuming of course that each token is backed by one real USD.
- howlgarnish 6y ago
  But they are not backed by real USD, and Tether themselves have admitted as much: their FAQ now states simply that it's backed up by "Tether's reserves", which apparently consist of other cryptocurrencies.
  - rabf 6y ago
    Please link your sources, their reserves as I understand may in some part consist of unspecified collateral, even if they are crypto which I seriously doubt due to its volatility the fact remains that Tether is trusted enough to be supported by the majority of major exchanges. The imminent demise of tether has been predicted for many years now. You can short tether at Kraken or choose to use one of the many other USD stable coins.
    - arcticbull 6y ago
      Never short crypto it's a rigged casino, first of all. Second, the fact tether is trusted and used by exchanges is more out of necessity than desire. They would die if they had to ask their so called customers to verify their identities and so both sides look the other way and pretend in a classic emperor has no clothes situation. I'm sure the tether based exchanges are squirming in their pants as tether prints another 2 billion fun bucks per month. Unless of course you have a theory about where an institution without a banking relationship, let alone an American banking relationship is storing just shy of twenty billion dollars US? And why legitimate investors are plowing two billion dollars per month into this scheme instead of putting it somewhere with audits and regulation like gemini or coinbase.
      - rabf 6y ago
        Kraken has many banking partners and do require KYC. A larger issue is that not everyone is in America but still require USD as is it is the most liquid exchange pair. I guess that this leads to many trusting USDT over American based tokenised dollars that are more subject to US courts. A better option could be DAI . though that is only backed by crypto assets thus far.
dcolkitt 6y ago
I've been doing some small-scale arbitrage trading in Uniswap and other Defi exchanges. As part of that I hold a fair bit of Tether, USDC and other stable coins. The reason being is that I want to keep my capital pegged to the dollar, but need something that's native to the Ethereum blockchain. If there's a trading opportunity, I need the ability to swap Tether for [X] token in a single blockchain transaction. There's no time to route actual dollar deposits from a real bank. Considering that there's something like $13 billion locked in all the various defi protocols, that's a lot of potential demand for stable coins.
- qeternity 6y ago
  It's likely that most/all of that stablecoin was amassed by selling other crypto, which is zero sum. It's extremely unlikely that people took fiat currencies, and bought USDT directly from Tether, which is what they claim is happening. No sane person would hold USDT over USD.
  - wmf 6y ago
    Unfortunately there's this story https://www.theblockcrypto.com/post/48857/former-head-of-circle-otc-says-theres-more-to-the-tether-narrative https://www.theblockcrypto.com/post/48857/former-head-of-cir... which says that legit investors wanted to buy on Bitfinex instead of a legit exchange so they had to first buy Tethers.
    - arcticbull 6y ago
      Totally irrelevant, the man's got a vested interest. Believe nothing short of an independent third-party audit from an auditor who doesn't walk out half way through like the last one did. The reason I say this should be pretty obvious to anyone whose familiar with the inner working of a Ponzi scheme or other similar investment scam. Bitfinex and Tether wanted to legitimize the use of Tethers, so they found one guy, Matuszewski, they knew was in a position to help them do so. They actually set aside a relatively tiny slice of capital (a few million out of 3 billion) and treated him the way they should be treating all customers but weren't. Then they let him loose on the talk circuits to tell the world of the sheer upstanding nature and legitimacy of Tether. This is exactly the kind of stuff Madoff did. Audit, or gtfo. (To Tether, Inc. not you of course)

by zaroth 6y ago

seppel 6y ago

> Even if the tether is only worth $0.70 it’s still a better deal for some people who can’t exit their BTC position legally. I don't get this part. What can you buy using tether, even if it is worth only $0.70? (Well, obviously you can buy bitcoin but this doesnt make any sense to buy the bitcoin back that you just sold. What else can you buy?)

raziel2701 6y ago
You can trade tether for other crypto in some exchanges.
- seppel 6y ago
  Yes but then someone else has the tether.

Danieru 6y ago

Tether's biggest holders presumably are people with cash balances at exchanges without us dollar banking. At such exchanges the account will show USD not tether.

rabf 6y ago

One large use for Tether is transferring value either for abitrage or to buy assets on another exchange not available on your current exchange. Sending real USD via the banking system could take weeks whereas sending Tether will take minutes. Also if Tether is trading below $1, Tether (the company) could buy them back and burn them for profit, assuming of course that each token is backed by one real USD.

howlgarnish 6y ago
But they are not backed by real USD, and Tether themselves have admitted as much: their FAQ now states simply that it's backed up by "Tether's reserves", which apparently consist of other cryptocurrencies.
- rabf 6y ago
  Please link your sources, their reserves as I understand may in some part consist of unspecified collateral, even if they are crypto which I seriously doubt due to its volatility the fact remains that Tether is trusted enough to be supported by the majority of major exchanges. The imminent demise of tether has been predicted for many years now. You can short tether at Kraken or choose to use one of the many other USD stable coins.
  - arcticbull 6y ago
    Never short crypto it's a rigged casino, first of all. Second, the fact tether is trusted and used by exchanges is more out of necessity than desire. They would die if they had to ask their so called customers to verify their identities and so both sides look the other way and pretend in a classic emperor has no clothes situation. I'm sure the tether based exchanges are squirming in their pants as tether prints another 2 billion fun bucks per month. Unless of course you have a theory about where an institution without a banking relationship, let alone an American banking relationship is storing just shy of twenty billion dollars US? And why legitimate investors are plowing two billion dollars per month into this scheme instead of putting it somewhere with audits and regulation like gemini or coinbase.
    - rabf 6y ago
      Kraken has many banking partners and do require KYC. A larger issue is that not everyone is in America but still require USD as is it is the most liquid exchange pair. I guess that this leads to many trusting USDT over American based tokenised dollars that are more subject to US courts. A better option could be DAI . though that is only backed by crypto assets thus far.

dcolkitt 6y ago

I've been doing some small-scale arbitrage trading in Uniswap and other Defi exchanges. As part of that I hold a fair bit of Tether, USDC and other stable coins. The reason being is that I want to keep my capital pegged to the dollar, but need something that's native to the Ethereum blockchain. If there's a trading opportunity, I need the ability to swap Tether for [X] token in a single blockchain transaction. There's no time to route actual dollar deposits from a real bank. Considering that there's something like $13 billion locked in all the various defi protocols, that's a lot of potential demand for stable coins.

qeternity 6y ago
It's likely that most/all of that stablecoin was amassed by selling other crypto, which is zero sum. It's extremely unlikely that people took fiat currencies, and bought USDT directly from Tether, which is what they claim is happening. No sane person would hold USDT over USD.
- wmf 6y ago
  Unfortunately there's this story https://www.theblockcrypto.com/post/48857/former-head-of-circle-otc-says-theres-more-to-the-tether-narrative https://www.theblockcrypto.com/post/48857/former-head-of-cir... which says that legit investors wanted to buy on Bitfinex instead of a legit exchange so they had to first buy Tethers.
  - arcticbull 6y ago
    Totally irrelevant, the man's got a vested interest. Believe nothing short of an independent third-party audit from an auditor who doesn't walk out half way through like the last one did. The reason I say this should be pretty obvious to anyone whose familiar with the inner working of a Ponzi scheme or other similar investment scam. Bitfinex and Tether wanted to legitimize the use of Tethers, so they found one guy, Matuszewski, they knew was in a position to help them do so. They actually set aside a relatively tiny slice of capital (a few million out of 3 billion) and treated him the way they should be treating all customers but weren't. Then they let him loose on the talk circuits to tell the world of the sheer upstanding nature and legitimacy of Tether. This is exactly the kind of stuff Madoff did. Audit, or gtfo. (To Tether, Inc. not you of course)