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The problem is that in the early days of @Bitfinex'ed this was all a bit of a sideshow because there was genuinely large interest from retail and the outcome of

The problem is that in the early days of @Bitfinex'ed this was all a bit of a sideshow because there was genuinely large interest from retail and the outcome of crypto was far less certain. However three years on, crypto still does not have a "killer app" and is 99.99% used for speculation. Bitcoin's narrative has had to morph from "digital currency" to "digital gold". But in the depths of the March panic, Tether jumped the shark in order to backstop the entire crypto ecosystem, and they can never put that genie back in the bottle. Much like the Fed who cannot stop monetizing US deficits for fear of letting yields explode, the Tetheral Reserve must continue to print USDT in order to support prices. Exchanges cannot let this fail since the vast majority do not have access to the bonafide banking system and thus scrappy users must devise "fiat onramps". There are many theories about why, the predominant one being that iFinex know they are screwed, and are making one last cash grab before presumably disappearing. This sounds fairly reasonable if the entire operation is indeed a sham, but it means there is effectively no upper bound to BTC prices because the denominator in 90% of the market (USDT) is effectively zero. Tether has become too big to fail. Bitcoin now finds itself a high tech manifestation of the very thing that Satoshi sought to address.

dylkil 6y ago
>Bitcoin's narrative has had to morph from "digital currency" to "digital gold". This narrative was an intentional morphing by various actors within the space (Blockstream) who believed raising the blocksize to allow higher throughput would cause 'centralisation'. Instead they want people to use layer 2 solutions such as blockstreams own federated product Liquid.
- tromp 6y ago
  As explained by blockstream co-founder Greg Maxwell in [1], the blocksize is constrained in order to ensure a steady backlog of fee paying transactions, that allow bitcoin to remain secure in the long term when block subsidy becomes insignificant. [1] https://bitcointalk.org/index.php?topic=5306354.0 https://bitcointalk.org/index.php?topic=5306354.0
  - dylkil 6y ago
    >that allow bitcoin to remain secure in the long term when block subsidy becomes insignificant. this line of reasoning is silly. To match the current block subsidy with the current block size limit when miner subsidy runs out the average transaction fee will need to be >$127. $45mil daily revenue / 350,000 txs per day OR, you could increase the block size limit to 10mb, allowing 3.5mil txs per day, or 100mb allowing 35mil txs per day. Then the average fee paid per tx is significant lower. The reason this was argued against by blockstream was because a bigger blocksize means more storage is needed by the miner and more txs means better hardware and bandwidth to process them, effectively pricing out normal people from running full nodes. Essentially, the ability for normal people to send a transaction cheaply is being sacrificed so that normal people can setup a full node. Counter intuitive imo.
    - FabHK 6y ago
      > when miner subsidy runs out the average transaction fee will need to be >$127. Stein's Law: "If something cannot go on forever, it will stop." https://en.wikipedia.org/wiki/Herbert_Stein#Stein's_Law https://en.wikipedia.org/wiki/Herbert_Stein#Stein's_Law
    - suikadayo 6y ago
      > normal people can setup a full node This argument was really silly too because people can afford higher capacity drives, and better internet connection according to Moore's Law
- suikadayo 6y ago
  I don't understand why you're being downvoted. Anybody who was here before 2017 know what happened.
sneak 6y ago
1 BTC will still be 1 BTC after the Tether scam and scammers are all history.
- Tepix 6y ago
  Perhaps we can go back to buying a pizza for 1 BTC when this is all over.
  - onion2k 6y ago
    I'll happily sell you a pizza for 1 BTC today if you want.
  - tim333 6y ago
    Not going to happen. It's a mindshare thing. If there are 10 million people who think I may as well have a bit of my portfolio in bitcoin that gives it value and that's probably not going away in a hurry. If anything it'll get worse as it goes from 1 million to 10 million to 100 million. Back when 1 bitcoin = 1 pizza there were perhaps 1000 people into it?
  - rufus_foreman 6y ago
    It was 10,000 BTC for 2 pizzas: https://bitcointalk.org/index.php?topic=137.msg1195#msg1195 https://bitcointalk.org/index.php?topic=137.msg1195#msg1195. One bitcoin used to buy you 0.0002 pizzas. Now it buys 1600.0000 pizzas. It's called hyperdeflation.
- Cthulhu_ 6y ago
  You're not wrong, it's just that nobody cares about BTC itself, but only about its value relative to USD. Crypto is not a currency but an investment product; can we please just accept that and talk about it for what it is?
  - leppr 6y ago
    "Nobody" is an exaggeration. There is a big community of enthusiasts who enjoy cryptocurrencies for what they are and enable, not for their USD value in the markets.
mmiliauskas 6y ago
Did you copy/paste this from 2017? :D
- qeternity 6y ago
  The fact that the above still remains true 3 years later is pretty damning.
  - tim333 6y ago
    It also suggests things will go on and we'll be in much the same situation in years going forward.
    - virgilp 6y ago
      No it does not - that's an invalid inductive conclusion. There are clear deadlines that may change everything (apparently Jan 15th might be one of them, from the twitter thread). Justice takes time, but trials do eventually come to a conclusion. If that conclusion is to kill the mechanism that pumps BTC, then all bets are off.
    - blueline 6y ago
      As Keynes famously said, "Past performance is a guarantee of future results"
shuntress 6y ago
>Bitcoin's narrative has had to morph from "digital currency" to "digital gold" The narrative around bitcoin has always been "It is digital currency. It works like gold". Hence the notion of "mining". EDIT: downvote me if you want but you are flat wrong Section 6 in the bitcoin whitepaper explicitly likens bitcoin to gold [0] >The steady addition of a constant of amount of new coins is analogous to gold miners expending resources to add gold to circulation [0]: https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf
- samvher 6y ago
  That may be true but there is definitely a difference between the way people talked about it earlier ("later we will all be paying with bitcoin") to how it is now ("it's a store of value and maybe there is potential for bitcoin-backed currencies").
  - gruez 6y ago
    I think the scaling limitations were well known at the beginning. If Bitcoin were to get as large as visa/mastercard the blockchain would be growing at a rate of a few gigabytes per day, which would kill decentralization.
    - shuntress 6y ago
      As far as I was aware, this problem was mostly ignored. It was expected (again, as stated in the whitepaper) that truncating transactions (in order to shrink blocks that are "old enough") would be able to manage block size well enough to stay reasonable. In my experience (circa ~2011,) this expectation seemed to be generally accepted without much question by anyone talking about bitcoin. If it was acknowledged as a flaw it was usually hand-waved as only likely to be a problem 10+ in the the future. edit: Or that a new network would learn from the bitcoin experiment and implement a protocol that works better at large scale.
      - DennisP 6y ago
        As far as new networks go, that appears to be happening.
tim333 6y ago
>does not have a "killer app" and is 99.99% used for speculation You could argue speculation is the killer app. I'm not a fan but it's hard to deny it's a huge business and some people seem to like it. Kind of like Las Vegas in a way.
- caeril 6y ago
  It definitely has a killer app. Probably not a big enough app to justify these prices, but one nonetheless. As Stripe, PayPal, Visa, Gofundme, Patreon, et. al. shut down avenues of payments for legal, but unpopular purchases, BTC is the obvious workaround. Vendors of firearms, pornography, legal funds for unpopular causes, dissident content creators, etc have become increasingly estranged from the "normal" payments market in the last few years. BTC is the killer app for this.
  - newsclues 6y ago
    If BTCs killer app is criminal transactions, then regulation is guaranteed.
    - eecks 6y ago
      Is it illegal to transfer value from person A to person B without the middleman?
      - alisonkisk 6y ago
        In many cases, yes. It's not the "middleman" that is required, but reporting the transaction to the government is.
        mmcwilliams 6y ago
        If avoiding reporting a transaction is the goal does committing the transaction to a public blockchain really bypass this? All activity is pseudonymous and in the clear.
        6y ago
lukebuehler 6y ago
I’ve been wondering if Tether is really a scam for a long time. In all these analyses, one key point is missing: arbitrage traders have to make up for the sell pressure on USDT when Tethers are being printed and sold for BTC. Can anyone show me how there is a plausible mechanism/scheme/conspiracy that keeps the USD/USDT exchange rate stable while a crazy amount of illegitimate Tethers are being printed? Edit: typo and removed link.
- dmichulke 6y ago
  Exactly, I don't say OP is wrong but I need to see how I can 1. buy X for USD 2. buy BTC for X Shouldn't the price for X then stay the same? (Bought X once, sold X once) Assuming X drops to 0, wouldn't people that have BTC just use another coin X' to get back to USD? Assuming company Y creates X out of thin air and buys BTC with it, why doesn't X drop in value? Because arbitrageurs buy it? So arbitrageurs have lots of X? Should I care if they go broke in the process?
  - Uberphallus 6y ago
    Since they can print X and they peg it to USD, it won't change in price itself, but nothing can assure the driving force of BTC price is actual demand.
    - dmichulke 6y ago
      When central banks peg their currencies to others, that means they buy the foreign currency if their own currency is overvalued in comparison, or sell foreign currency to buy local curerncy in the case of undervaluation. You say that a peg breaks if the Central Bank doesn't have the exchange reserves anymore to uphold a peg. Where does Bitfinex take the money from to buy tether to prevent it from devaluing? Alternatively, who else buys tether, arbitrageurs?
      - qeternity 6y ago
        You're missing the entire premise: where can I go sell my USDT directly for USD? Show me where. Unlike your example where this an existing market that a peg has to be supported, there simply isn't a fungible USDT/USD market.
JohnJamesRambo 6y ago
The killer app for Bitcoin is escaping government fiat money that is backed by literally nothing at all and is being printed at increasingly alarming rates. 40% of all USD ever created were “made” in 2020. That will have repercussions for decades and isn’t a currency I want to stay in. https://fred.stlouisfed.org/series/M1 https://fred.stlouisfed.org/series/M1 Ironically (or not) Bitcoin was created in 2009 right when that graph gets really crazy.
- notahacker 6y ago
  USD is backed by being valid for the redemption of outstanding USD denominated invoices, loan repayments and tax bills, all of which ensures demand to possess the currency and are likely to continue to exist in increasing quantities in future. "Escaping" that for something which literally is backed by nothing at all is a strange move.
- raesene9 6y ago
  That only works when people take payment in BTC without translating the value provided back to a Fiat currency. Until that time, expansion of the USD (or other Fiat) supply impacts the "value" that BTC has.
  - dmichulke 6y ago
    During the gold standard, did people take payment in gold? I don't think so... They used paper that symbolized "withdrawal rights to gold". USD (or any other piece of paper that people agree has a value) is a perfect currency for exchange, it's just not a great store of value.
    - raesene9 6y ago
      The point I was responding to was saying that they wanted to get away from USD and that this was BTC's killer app. My point is that you can't "get away" from USD, while the BTC market is effectively tied to USD. so if the USD supply is massively inflated, and people can use those USD to buy BTC, the tie is still there. If and when people denominate their goods and services in BTC without any reference to a fiat amount, then they are decoupled and BTC loses the tie to USD.
qeternity 6y ago
Too late to edit my original comment but a lot of people pointing to the "peg" as proof that Tether is legitimate. The only peg that exists is the one whereby you should be able to go to Tether Inc and redeem USDT for USD 1:1. That peg has never ever been demonstrated (publicly). All the other "pegs" are just cash trading. If I trade USDT/USD on Binance...I don't actually have USD. Even on that pair, my USD profit/loss are denominated in USDT. For anyone who disagrees with the above - please show me market where I can go sell my USDT directly for USD.
- sekai 6y ago
  > For anyone who disagrees with the above - please show me market where I can go sell my USDT directly for USD. Kraken, Bitstamp, did so for 3 years+
  - qeternity 6y ago
    And I wonder why Bitstamp, a fairly legitimate shop, stopped using Tether...
- marcandre 6y ago
  Kraken.com has an actual USDT/USD pair you can trade and use actual hard currency.
  - FabHK 6y ago
    Yes, you can trade them there. However, there is no mechanism imposed by Kraken to keep the price close to 1. It is purely supply and demand. Nothing prevents the price of USDT from collapsing (apart from arbitrage predicated on exchanging USDT back into USD).
- sjs382 6y ago
  > For anyone who disagrees with the above - please show me market where I can go sell my USDT directly for USD. Genuinely curious, as someone who has never used Binance nor USDT: Why is the "directly" part here significant? If I can USDT (Binance) -> USD (Binance) -> BTC (Binance) -> BTC (Coinbase) -> USD (Coinbase) -> USD (My Bank), then whats the difference other than a few extra steps?
beaner 6y ago
How do you square this with the observation that other fiat-backed stablecoins like USDC, which are obviously legitimate, are also printing massively? It would seem to me that if transparent stablecoins with utility are going up, the simplest explanation for tether going up is that it serves the same role for people who have either become accustomed to it from its earlier availability, or have it as their only option due to jurisdiction. Not anything nefarious. There seems to be little actual evidence to support conspiracy theories that Bitcoin's price movements are due to mismanagement of tether.
- therein 6y ago
  Except for timing time after time. Most rallies have a corresponding Tether print right prior to them.
  - gruez 6y ago
    The price of an asset goes up when money is being poured into the asset. For many exchanges "money" means USDT, so it makes perfect sense that USDT would be printed before a rally, regardless of malfeasance on tether's part.
  - gillesjacobs 6y ago
    Is there any proof or data on Tether issuance preceding rallies? Because I have seen this claim often made on Twitter, but never with any sources. I personally dislike Tether and avoid it, but strong claims require strong evidence.
    - long 6y ago
      Here's an econ paper that studies that question: https://www.researchgate.net/publication/342185292_Is_Bitcoin_Really_Untethered https://www.researchgate.net/publication/342185292_Is_Bitcoi...
      - gillesjacobs 6y ago
        Thanks, I will have to read it carefully, but from the abstract it doesn't seem as simple as "increased Tether printing makes BTC rally." But if there is in fact a statistically significant correlation, I would personally wager there's causation and hedge my bets accordingly.
marfusios 6y ago
That's gonna be the killer app, low-cost global payments, finally we can accept international payments from non-crypto customers without ridiculous SWIFT or PayPal fees... https://jimmymow.medium.com/announcing-strike-global-2392b908f611 https://jimmymow.medium.com/announcing-strike-global-2392b90...
- shuckles 6y ago
  Most global payments are transactions, not cash transfers, and the transacting parties have banking relationships that make those transfers low cost and strictly superior to Bitcoin.
  - marfusios 6y ago
    As a freelancer based in EU working on some US projects, I'm forced to pay 5.5% fee to PayPal or some fix fee to the banks (SWIFT payment). Plus conversion fee from USD to EUR (or my local currency). That's too high for just a simple thing as receiving money from different country. Really looking forward for that Strike Global.
    - itsArtur 6y ago
      Use Revolut
    - logifail 6y ago
      > I'm forced to pay 5.5% fee [..] > Plus conversion fee from USD to EUR [...] > a simple thing as receiving money from different country Moving money between currencies has never been easier, or cheaper. I would humbly suggest you're doing it wrong.
      - elvatoloco55 6y ago
        Oh really? Fees are low for accepting foreign currency for a business, please do tell your secrets. Lol, classic US centric view
    - 6y ago
TomSwirly 6y ago
> However three years on, crypto still does not have a "killer app" and is 99.99% used for speculation With all due respect, this is completely wrong - crypto has the same killer app it has for years, and that app is _crime_. Whether you're buying drugs, paying anonymous extortioners, accepting bribes, money laundering, or tax evasion, cryptocurrency is the go-to choice for electronic funds transfer for your modern criminal.
nradov 6y ago
The crypto killer app is evading China's currency controls. Pay for mining hardware and electricity in renminbi, transfer cryptocurrency to foreign countries, exchange for convertible fiat hard currency (dollars, euros, etc.).
- user-the-name 6y ago
  Worth noting that those dollars and euros come from the people buying bitcoins. And there is no obvious place for further money to come from once they want to cash back out.
doggosphere 6y ago
However three years on, crypto still does not have a "killer app" and is 99.99% used for speculation. The killer app is decentralized, permissionless, open source, and censorship resistant network. Bitcoin's narrative has had to morph from "digital currency" to "digital gold". Gold morphed from worthless rocks in the the ground, to coins traded by traveling merchants, to stores of value that were eventually centralized and monopolized by governments. RE: Tether I don't trust them either, but we need more evidence of this alleged printing. We saw that they did remove the 1:1 peg briefly when Crypto Capital in Panama (?) froze a few hundred million of their USD. Bitcoin now finds itself a high tech manifestation of the very thing that Satoshi sought to address. Bitcoin is sound. The centralized exchange layer built on top of it is dirty.
- vorpalhex 6y ago
  > The killer app is decentralized, permissionless, open source, and censorship resistant network. Yes, but what can I do with that other than toot/tweet/twit at other people and buy LSD tabs?
  - doggosphere 6y ago
    With Bitcoin you own property that can never be confiscated or debased by any government. With IPFS you can host and access files that can't be censored. (same level of censorship resistance as torrents) With Monero you can transact free from surveillance. The biggest applications on Ethereum right now is decentralized finance, with billions of dollars locked in.
    - corrys 6y ago
      Bitcoins have been confiscated by many governments. A quick Google search reveals many instances of that.
      - doggosphere 6y ago
        Lets clarify semantics. Can the government seize Bitcoin directly? No. Can the government seize your bank account directly? Yes. Can they threaten you with jail if you don't hand over your Bitcoin? Yes
Mc_Big_G 6y ago
>Bitcoin's narrative has had to morph from "digital currency" to "digital gold "Gold's narrative has had to morph from currency to store of wealth" Circa 1971
agumonkey 6y ago
> Bitcoin's narrative has had to morph from "digital currency" to "digital gold". M. Saylor is preaching this it seems. It's just a better asset (less supply, no mass~)
tobltobs 6y ago
The killer app of Bitcoin is Ransomware.

dylkil 6y ago

>Bitcoin's narrative has had to morph from "digital currency" to "digital gold". This narrative was an intentional morphing by various actors within the space (Blockstream) who believed raising the blocksize to allow higher throughput would cause 'centralisation'. Instead they want people to use layer 2 solutions such as blockstreams own federated product Liquid.

tromp 6y ago
As explained by blockstream co-founder Greg Maxwell in [1], the blocksize is constrained in order to ensure a steady backlog of fee paying transactions, that allow bitcoin to remain secure in the long term when block subsidy becomes insignificant. [1] https://bitcointalk.org/index.php?topic=5306354.0 https://bitcointalk.org/index.php?topic=5306354.0
- dylkil 6y ago
  >that allow bitcoin to remain secure in the long term when block subsidy becomes insignificant. this line of reasoning is silly. To match the current block subsidy with the current block size limit when miner subsidy runs out the average transaction fee will need to be >$127. $45mil daily revenue / 350,000 txs per day OR, you could increase the block size limit to 10mb, allowing 3.5mil txs per day, or 100mb allowing 35mil txs per day. Then the average fee paid per tx is significant lower. The reason this was argued against by blockstream was because a bigger blocksize means more storage is needed by the miner and more txs means better hardware and bandwidth to process them, effectively pricing out normal people from running full nodes. Essentially, the ability for normal people to send a transaction cheaply is being sacrificed so that normal people can setup a full node. Counter intuitive imo.
  - FabHK 6y ago
    > when miner subsidy runs out the average transaction fee will need to be >$127. Stein's Law: "If something cannot go on forever, it will stop." https://en.wikipedia.org/wiki/Herbert_Stein#Stein's_Law https://en.wikipedia.org/wiki/Herbert_Stein#Stein's_Law
  - suikadayo 6y ago
    > normal people can setup a full node This argument was really silly too because people can afford higher capacity drives, and better internet connection according to Moore's Law
suikadayo 6y ago
I don't understand why you're being downvoted. Anybody who was here before 2017 know what happened.

sneak 6y ago

1 BTC will still be 1 BTC after the Tether scam and scammers are all history.

Tepix 6y ago
Perhaps we can go back to buying a pizza for 1 BTC when this is all over.
- onion2k 6y ago
  I'll happily sell you a pizza for 1 BTC today if you want.
- tim333 6y ago
  Not going to happen. It's a mindshare thing. If there are 10 million people who think I may as well have a bit of my portfolio in bitcoin that gives it value and that's probably not going away in a hurry. If anything it'll get worse as it goes from 1 million to 10 million to 100 million. Back when 1 bitcoin = 1 pizza there were perhaps 1000 people into it?
- rufus_foreman 6y ago
  It was 10,000 BTC for 2 pizzas: https://bitcointalk.org/index.php?topic=137.msg1195#msg1195 https://bitcointalk.org/index.php?topic=137.msg1195#msg1195. One bitcoin used to buy you 0.0002 pizzas. Now it buys 1600.0000 pizzas. It's called hyperdeflation.
Cthulhu_ 6y ago
You're not wrong, it's just that nobody cares about BTC itself, but only about its value relative to USD. Crypto is not a currency but an investment product; can we please just accept that and talk about it for what it is?
- leppr 6y ago
  "Nobody" is an exaggeration. There is a big community of enthusiasts who enjoy cryptocurrencies for what they are and enable, not for their USD value in the markets.

mmiliauskas 6y ago

Did you copy/paste this from 2017? :D

qeternity 6y ago
The fact that the above still remains true 3 years later is pretty damning.
- tim333 6y ago
  It also suggests things will go on and we'll be in much the same situation in years going forward.
  - virgilp 6y ago
    No it does not - that's an invalid inductive conclusion. There are clear deadlines that may change everything (apparently Jan 15th might be one of them, from the twitter thread). Justice takes time, but trials do eventually come to a conclusion. If that conclusion is to kill the mechanism that pumps BTC, then all bets are off.
  - blueline 6y ago
    As Keynes famously said, "Past performance is a guarantee of future results"

shuntress 6y ago

>Bitcoin's narrative has had to morph from "digital currency" to "digital gold" The narrative around bitcoin has always been "It is digital currency. It works like gold". Hence the notion of "mining". EDIT: downvote me if you want but you are flat wrong Section 6 in the bitcoin whitepaper explicitly likens bitcoin to gold [0] >The steady addition of a constant of amount of new coins is analogous to gold miners expending resources to add gold to circulation [0]: https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf

samvher 6y ago
That may be true but there is definitely a difference between the way people talked about it earlier ("later we will all be paying with bitcoin") to how it is now ("it's a store of value and maybe there is potential for bitcoin-backed currencies").
- gruez 6y ago
  I think the scaling limitations were well known at the beginning. If Bitcoin were to get as large as visa/mastercard the blockchain would be growing at a rate of a few gigabytes per day, which would kill decentralization.
  - shuntress 6y ago
    As far as I was aware, this problem was mostly ignored. It was expected (again, as stated in the whitepaper) that truncating transactions (in order to shrink blocks that are "old enough") would be able to manage block size well enough to stay reasonable. In my experience (circa ~2011,) this expectation seemed to be generally accepted without much question by anyone talking about bitcoin. If it was acknowledged as a flaw it was usually hand-waved as only likely to be a problem 10+ in the the future. edit: Or that a new network would learn from the bitcoin experiment and implement a protocol that works better at large scale.
    - DennisP 6y ago
      As far as new networks go, that appears to be happening.

tim333 6y ago

>does not have a "killer app" and is 99.99% used for speculation You could argue speculation is the killer app. I'm not a fan but it's hard to deny it's a huge business and some people seem to like it. Kind of like Las Vegas in a way.

caeril 6y ago
It definitely has a killer app. Probably not a big enough app to justify these prices, but one nonetheless. As Stripe, PayPal, Visa, Gofundme, Patreon, et. al. shut down avenues of payments for legal, but unpopular purchases, BTC is the obvious workaround. Vendors of firearms, pornography, legal funds for unpopular causes, dissident content creators, etc have become increasingly estranged from the "normal" payments market in the last few years. BTC is the killer app for this.
- newsclues 6y ago
  If BTCs killer app is criminal transactions, then regulation is guaranteed.
  - eecks 6y ago
    Is it illegal to transfer value from person A to person B without the middleman?
    - alisonkisk 6y ago
      In many cases, yes. It's not the "middleman" that is required, but reporting the transaction to the government is.
      - mmcwilliams 6y ago
        If avoiding reporting a transaction is the goal does committing the transaction to a public blockchain really bypass this? All activity is pseudonymous and in the clear.
      - 6y ago

lukebuehler 6y ago

I’ve been wondering if Tether is really a scam for a long time. In all these analyses, one key point is missing: arbitrage traders have to make up for the sell pressure on USDT when Tethers are being printed and sold for BTC. Can anyone show me how there is a plausible mechanism/scheme/conspiracy that keeps the USD/USDT exchange rate stable while a crazy amount of illegitimate Tethers are being printed? Edit: typo and removed link.

dmichulke 6y ago
Exactly, I don't say OP is wrong but I need to see how I can 1. buy X for USD 2. buy BTC for X Shouldn't the price for X then stay the same? (Bought X once, sold X once) Assuming X drops to 0, wouldn't people that have BTC just use another coin X' to get back to USD? Assuming company Y creates X out of thin air and buys BTC with it, why doesn't X drop in value? Because arbitrageurs buy it? So arbitrageurs have lots of X? Should I care if they go broke in the process?
- Uberphallus 6y ago
  Since they can print X and they peg it to USD, it won't change in price itself, but nothing can assure the driving force of BTC price is actual demand.
  - dmichulke 6y ago
    When central banks peg their currencies to others, that means they buy the foreign currency if their own currency is overvalued in comparison, or sell foreign currency to buy local curerncy in the case of undervaluation. You say that a peg breaks if the Central Bank doesn't have the exchange reserves anymore to uphold a peg. Where does Bitfinex take the money from to buy tether to prevent it from devaluing? Alternatively, who else buys tether, arbitrageurs?
    - qeternity 6y ago
      You're missing the entire premise: where can I go sell my USDT directly for USD? Show me where. Unlike your example where this an existing market that a peg has to be supported, there simply isn't a fungible USDT/USD market.

JohnJamesRambo 6y ago

The killer app for Bitcoin is escaping government fiat money that is backed by literally nothing at all and is being printed at increasingly alarming rates. 40% of all USD ever created were “made” in 2020. That will have repercussions for decades and isn’t a currency I want to stay in. https://fred.stlouisfed.org/series/M1 https://fred.stlouisfed.org/series/M1 Ironically (or not) Bitcoin was created in 2009 right when that graph gets really crazy.

notahacker 6y ago
USD is backed by being valid for the redemption of outstanding USD denominated invoices, loan repayments and tax bills, all of which ensures demand to possess the currency and are likely to continue to exist in increasing quantities in future. "Escaping" that for something which literally is backed by nothing at all is a strange move.
raesene9 6y ago
That only works when people take payment in BTC without translating the value provided back to a Fiat currency. Until that time, expansion of the USD (or other Fiat) supply impacts the "value" that BTC has.
- dmichulke 6y ago
  During the gold standard, did people take payment in gold? I don't think so... They used paper that symbolized "withdrawal rights to gold". USD (or any other piece of paper that people agree has a value) is a perfect currency for exchange, it's just not a great store of value.
  - raesene9 6y ago
    The point I was responding to was saying that they wanted to get away from USD and that this was BTC's killer app. My point is that you can't "get away" from USD, while the BTC market is effectively tied to USD. so if the USD supply is massively inflated, and people can use those USD to buy BTC, the tie is still there. If and when people denominate their goods and services in BTC without any reference to a fiat amount, then they are decoupled and BTC loses the tie to USD.

qeternity 6y ago

Too late to edit my original comment but a lot of people pointing to the "peg" as proof that Tether is legitimate. The only peg that exists is the one whereby you should be able to go to Tether Inc and redeem USDT for USD 1:1. That peg has never ever been demonstrated (publicly). All the other "pegs" are just cash trading. If I trade USDT/USD on Binance...I don't actually have USD. Even on that pair, my USD profit/loss are denominated in USDT. For anyone who disagrees with the above - please show me market where I can go sell my USDT directly for USD.

sekai 6y ago
> For anyone who disagrees with the above - please show me market where I can go sell my USDT directly for USD. Kraken, Bitstamp, did so for 3 years+
- qeternity 6y ago
  And I wonder why Bitstamp, a fairly legitimate shop, stopped using Tether...
marcandre 6y ago
Kraken.com has an actual USDT/USD pair you can trade and use actual hard currency.
- FabHK 6y ago
  Yes, you can trade them there. However, there is no mechanism imposed by Kraken to keep the price close to 1. It is purely supply and demand. Nothing prevents the price of USDT from collapsing (apart from arbitrage predicated on exchanging USDT back into USD).
sjs382 6y ago
> For anyone who disagrees with the above - please show me market where I can go sell my USDT directly for USD. Genuinely curious, as someone who has never used Binance nor USDT: Why is the "directly" part here significant? If I can USDT (Binance) -> USD (Binance) -> BTC (Binance) -> BTC (Coinbase) -> USD (Coinbase) -> USD (My Bank), then whats the difference other than a few extra steps?

beaner 6y ago

How do you square this with the observation that other fiat-backed stablecoins like USDC, which are obviously legitimate, are also printing massively? It would seem to me that if transparent stablecoins with utility are going up, the simplest explanation for tether going up is that it serves the same role for people who have either become accustomed to it from its earlier availability, or have it as their only option due to jurisdiction. Not anything nefarious. There seems to be little actual evidence to support conspiracy theories that Bitcoin's price movements are due to mismanagement of tether.

therein 6y ago
Except for timing time after time. Most rallies have a corresponding Tether print right prior to them.
- gruez 6y ago
  The price of an asset goes up when money is being poured into the asset. For many exchanges "money" means USDT, so it makes perfect sense that USDT would be printed before a rally, regardless of malfeasance on tether's part.
- gillesjacobs 6y ago
  Is there any proof or data on Tether issuance preceding rallies? Because I have seen this claim often made on Twitter, but never with any sources. I personally dislike Tether and avoid it, but strong claims require strong evidence.
  - long 6y ago
    Here's an econ paper that studies that question: https://www.researchgate.net/publication/342185292_Is_Bitcoin_Really_Untethered https://www.researchgate.net/publication/342185292_Is_Bitcoi...
    - gillesjacobs 6y ago
      Thanks, I will have to read it carefully, but from the abstract it doesn't seem as simple as "increased Tether printing makes BTC rally." But if there is in fact a statistically significant correlation, I would personally wager there's causation and hedge my bets accordingly.

marfusios 6y ago

That's gonna be the killer app, low-cost global payments, finally we can accept international payments from non-crypto customers without ridiculous SWIFT or PayPal fees... https://jimmymow.medium.com/announcing-strike-global-2392b908f611 https://jimmymow.medium.com/announcing-strike-global-2392b90...

shuckles 6y ago
Most global payments are transactions, not cash transfers, and the transacting parties have banking relationships that make those transfers low cost and strictly superior to Bitcoin.
- marfusios 6y ago
  As a freelancer based in EU working on some US projects, I'm forced to pay 5.5% fee to PayPal or some fix fee to the banks (SWIFT payment). Plus conversion fee from USD to EUR (or my local currency). That's too high for just a simple thing as receiving money from different country. Really looking forward for that Strike Global.
  - itsArtur 6y ago
    Use Revolut
  - logifail 6y ago
    > I'm forced to pay 5.5% fee [..] > Plus conversion fee from USD to EUR [...] > a simple thing as receiving money from different country Moving money between currencies has never been easier, or cheaper. I would humbly suggest you're doing it wrong.
    - elvatoloco55 6y ago
      Oh really? Fees are low for accepting foreign currency for a business, please do tell your secrets. Lol, classic US centric view
  - 6y ago

TomSwirly 6y ago

> However three years on, crypto still does not have a "killer app" and is 99.99% used for speculation With all due respect, this is completely wrong - crypto has the same killer app it has for years, and that app is _crime_. Whether you're buying drugs, paying anonymous extortioners, accepting bribes, money laundering, or tax evasion, cryptocurrency is the go-to choice for electronic funds transfer for your modern criminal.

nradov 6y ago

The crypto killer app is evading China's currency controls. Pay for mining hardware and electricity in renminbi, transfer cryptocurrency to foreign countries, exchange for convertible fiat hard currency (dollars, euros, etc.).

user-the-name 6y ago
Worth noting that those dollars and euros come from the people buying bitcoins. And there is no obvious place for further money to come from once they want to cash back out.

doggosphere 6y ago

However three years on, crypto still does not have a "killer app" and is 99.99% used for speculation. The killer app is decentralized, permissionless, open source, and censorship resistant network. Bitcoin's narrative has had to morph from "digital currency" to "digital gold". Gold morphed from worthless rocks in the the ground, to coins traded by traveling merchants, to stores of value that were eventually centralized and monopolized by governments. RE: Tether I don't trust them either, but we need more evidence of this alleged printing. We saw that they did remove the 1:1 peg briefly when Crypto Capital in Panama (?) froze a few hundred million of their USD. Bitcoin now finds itself a high tech manifestation of the very thing that Satoshi sought to address. Bitcoin is sound. The centralized exchange layer built on top of it is dirty.

vorpalhex 6y ago
> The killer app is decentralized, permissionless, open source, and censorship resistant network. Yes, but what can I do with that other than toot/tweet/twit at other people and buy LSD tabs?
- doggosphere 6y ago
  With Bitcoin you own property that can never be confiscated or debased by any government. With IPFS you can host and access files that can't be censored. (same level of censorship resistance as torrents) With Monero you can transact free from surveillance. The biggest applications on Ethereum right now is decentralized finance, with billions of dollars locked in.
  - corrys 6y ago
    Bitcoins have been confiscated by many governments. A quick Google search reveals many instances of that.
    - doggosphere 6y ago
      Lets clarify semantics. Can the government seize Bitcoin directly? No. Can the government seize your bank account directly? Yes. Can they threaten you with jail if you don't hand over your Bitcoin? Yes

Mc_Big_G 6y ago

>Bitcoin's narrative has had to morph from "digital currency" to "digital gold "Gold's narrative has had to morph from currency to store of wealth" Circa 1971

agumonkey 6y ago

> Bitcoin's narrative has had to morph from "digital currency" to "digital gold". M. Saylor is preaching this it seems. It's just a better asset (less supply, no mass~)

tobltobs 6y ago

The killer app of Bitcoin is Ransomware.