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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,

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.
    - gruez 6y ago
      > You're missing the entire premise: where can I go sell my USDT directly for USD? Show me where. https://trade.kraken.com/charts/KRAKEN:USDT-USD https://trade.kraken.com/charts/KRAKEN:USDT-USD
qeternity 6y ago
Because the mechanism to transmit USDT to USD doesn't exist. Tether has never demonstrated a single USDT redemption. All of the trading on an exchange doesn't matter because on USDT exchanges, you never actually have USD. If you trade USDT/USD on Binance, your profits are still actually USDT denominated! There is no proven way to convert USDT to USD except via another crypto (i.e. Binance USDT -> BTC and then Coinbase BTC -> USD) hence this entire topic... The peg would break down if there was any real convergence mechanism. But there isn't. This isn't a problem until people actually try to exchange these supposedly fungible assets.
- gruez 6y ago
  >Tether has never demonstrated a single USDT redemption Does that matter when you can withdraw from a USDT exchange and get USD in a bank account, or trade USDT for USD at kraken?
  - qeternity 6y ago
    Yes - none of this proves that Tether has any reserves. It just proves that someone else believes they do...which we already know.
    - gruez 6y ago
      This is moving the goalposts. I don't think anyone thinks tether has full reserves. They literally admitted that they don't[1]. However your original claim of "you can't redeem USDT" is misleading at best. [1] wikipedia: "On 30 April 2019 Tether Limited's lawyer claimed that each tether was backed by only $0.74 in cash and cash equivalents"
      - FireBeyond 6y ago
        That was after how many years of Tether insisting that they had 1:1 reserves, talking about audits thereof, threatening lawsuits against people who said they didn't? ... and many many crypto-fans naysaying anyone who didn't believe them.

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.
  - gruez 6y ago
    > You're missing the entire premise: where can I go sell my USDT directly for USD? Show me where. https://trade.kraken.com/charts/KRAKEN:USDT-USD https://trade.kraken.com/charts/KRAKEN:USDT-USD

qeternity 6y ago

Because the mechanism to transmit USDT to USD doesn't exist. Tether has never demonstrated a single USDT redemption. All of the trading on an exchange doesn't matter because on USDT exchanges, you never actually have USD. If you trade USDT/USD on Binance, your profits are still actually USDT denominated! There is no proven way to convert USDT to USD except via another crypto (i.e. Binance USDT -> BTC and then Coinbase BTC -> USD) hence this entire topic... The peg would break down if there was any real convergence mechanism. But there isn't. This isn't a problem until people actually try to exchange these supposedly fungible assets.

gruez 6y ago
>Tether has never demonstrated a single USDT redemption Does that matter when you can withdraw from a USDT exchange and get USD in a bank account, or trade USDT for USD at kraken?
- qeternity 6y ago
  Yes - none of this proves that Tether has any reserves. It just proves that someone else believes they do...which we already know.
  - gruez 6y ago
    This is moving the goalposts. I don't think anyone thinks tether has full reserves. They literally admitted that they don't[1]. However your original claim of "you can't redeem USDT" is misleading at best. [1] wikipedia: "On 30 April 2019 Tether Limited's lawyer claimed that each tether was backed by only $0.74 in cash and cash equivalents"
    - FireBeyond 6y ago
      That was after how many years of Tether insisting that they had 1:1 reserves, talking about audits thereof, threatening lawsuits against people who said they didn't? ... and many many crypto-fans naysaying anyone who didn't believe them.