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No, instead of just stating it, explain to me. Tether's reserves only matter when people try to redeem Tethers. This is currently not possible. So it is purel

No, instead of just stating it, explain to me. Tether's reserves only matter when people try to redeem Tethers. This is currently not possible. So it is purely a trust game right now, and everyone has an incentive to trust (or turn a blind eye) that Tether is playing by the rules.

csomar 6y ago
> Tether's reserves only matter when people try to redeem Tethers. This is currently not possible. This is why being liquid and freely trade-able matters. Tether is fully redeemable if you can trade it against other crypto/stable coins. Want to redeem USDT? exchange it to USDC and then withdraw to your bank account.
- qeternity 6y ago
  No, trading is not redeeming. The fact that you will buy it from me or swap me USDC does not prove that they have any reserves. So again I ask - how do we have any proof that Tether has the reserves they claim they do?
  - csomar 6y ago
    Somebody will need to take the counter-trade (the arbitrage dude) and unless he can redeem to close the circle, he is going to stop. USDT are redeemable to your bank account if you have a good sizable balance (talking 7-8 figures). You'll get it deposited from some of their offshore shell companies. But you didn't hear it from me :)
    - qeternity 6y ago
      No, they don't. There doesn't need to be an arbitrage. If you have 10 USDT and I give you 9.90 USD for that...nothing else needs to happen. But the degree that this is happening pales massively in comparison to the billions that are sat on exchanges and recycled. Tether would be the first legitimate billion dollar operation where people have to say things like "but you didn't hear it from me".
      - jrh206 6y ago
        > No, they don't. There doesn't need to be an arbitrage. If you have 10 USDT and I give you 9.90 USD for that...nothing else needs to happen. I'm not an expert, so I might be wrong (seriously, not sarcastically). I _think_ this is technically arbitrage even though you never complete the loop.
        qeternity 6y ago
        I’m a hedge fund trader. It’s not an arbitrage. It’s the furthest thing from an arbitrage.
        tylerhou 6y ago
        It's arbitrage if you can close the loop with little or no risk. Preferably immediately if you already have a buyer lined up. Otherwise, you incur more risk -- you might be caught holding the bag when the music stops.

csomar 6y ago

> Tether's reserves only matter when people try to redeem Tethers. This is currently not possible. This is why being liquid and freely trade-able matters. Tether is fully redeemable if you can trade it against other crypto/stable coins. Want to redeem USDT? exchange it to USDC and then withdraw to your bank account.

qeternity 6y ago
No, trading is not redeeming. The fact that you will buy it from me or swap me USDC does not prove that they have any reserves. So again I ask - how do we have any proof that Tether has the reserves they claim they do?
- csomar 6y ago
  Somebody will need to take the counter-trade (the arbitrage dude) and unless he can redeem to close the circle, he is going to stop. USDT are redeemable to your bank account if you have a good sizable balance (talking 7-8 figures). You'll get it deposited from some of their offshore shell companies. But you didn't hear it from me :)
  - qeternity 6y ago
    No, they don't. There doesn't need to be an arbitrage. If you have 10 USDT and I give you 9.90 USD for that...nothing else needs to happen. But the degree that this is happening pales massively in comparison to the billions that are sat on exchanges and recycled. Tether would be the first legitimate billion dollar operation where people have to say things like "but you didn't hear it from me".
    - jrh206 6y ago
      > No, they don't. There doesn't need to be an arbitrage. If you have 10 USDT and I give you 9.90 USD for that...nothing else needs to happen. I'm not an expert, so I might be wrong (seriously, not sarcastically). I _think_ this is technically arbitrage even though you never complete the loop.
      - qeternity 6y ago
        I’m a hedge fund trader. It’s not an arbitrage. It’s the furthest thing from an arbitrage.
      - tylerhou 6y ago
        It's arbitrage if you can close the loop with little or no risk. Preferably immediately if you already have a buyer lined up. Otherwise, you incur more risk -- you might be caught holding the bag when the music stops.