7 ms·

I don't get it. tether sucks. If you hold tether it may turn into air. But your bitcoin is still bitcoin. Also, when tether is going down wouldn't you want to s

by comboy 6y ago

I don't get it. tether sucks. If you hold tether it may turn into air. But your bitcoin is still bitcoin. Also, when tether is going down wouldn't you want to sell it thus creating pressure in btc/tether market and value of of tether/btc going up? It's always been clear to me that USD/BTC and USDT/BTC are two different markets. USDT is just another cryptocurrency. Many of them were scams and disappeared and many more will. Same with exchanges. It seems like describing somebody maliciously selling fake or paper gold and concluding that gold is bad.

leppr 6y ago
Did you read the article? The author doesn't concluse that Bitcoin in itself is bad, they simply realized by themselves that most of the dollar value increase was caused by Tether, and they fear Tether eventually going down might be a black swan event causing prices to tumble. But 1 BTC = 1 BTC, yes.
- comboy 6y ago
  Many value increases are irrational, whatever that means, I understand how it can be used to pump the price. I just don't understand how it takes bitcoin with it when collapsing.
  - quickthrower2 6y ago
    If tether is pumping BTC then it’ll stop pumping BTC when it’s taken away. Weak hands will fold and then there will be a crash
    - comboy 6y ago
      OK, yes, that's a fair point. But it's not clear to me that pumping being taken away would be a bigger change than people trying to get out of USDT and buying BTC. Also we've been there (mtgox's willy etc). I don't think bitcoin will be much less volatile any time soon. https://www.youtube.com/watch?v=XbZ8zDpX2Mg https://www.youtube.com/watch?v=XbZ8zDpX2Mg
      - leppr 6y ago
        People are not buying BTC to get out of USDT, they're buying other stablecoins and tokens pegged to real world assets. The last week has seen a surge in the price of those tokens compared to USDT. I've made good money arbitraging the bouts of panic.
      - dragonwriter 6y ago
        > But it's not clear to me that pumping being taken away would be a bigger change than people trying to get out of USDT and buying BTC People trying to get out of USDT into BTC because the USDT:USD parity assumption collapses will boost BTC:USDT prices, but probably not enough to avoid dropping BTC:USD, because it would be less than the USDT:USD drop, is the idea.
      - garmaine 6y ago
        How would you sell USDT? You’d buy on a BTC/USDT market. These markets aren’t unified—there are different markets for tether and backed USD. Who would be counterparty to a tether exchange? Thise specific USDT pairings would crash. If they wanted USD (as they presumably do), they’d then crash the other stable coin or backed pairings.
      - TomSwirly 6y ago
        Bitcoin has no fundamental/breakup value and no market maker. In the same way that there's no obvious ceiling to its value, if a lot of people try to get out of it at once, there's no obvious floor either.
    - yeneek 6y ago
      Tether market cap is 24bil, Bitcoin market cap is 714bil. Its just 3%. I think that Tether isn't inflating BTC that much. The institutions that buy BTC like PayPal, Square, JPMorgan have much bigger effect on Bitcoin than Tether.
      - yeneek 6y ago
        JackFr Fair point. Thank you. Well, it will be an interesting week for sure.
      - JackFr 6y ago
        That’s not quite how it’s gonna work. It doesn’t matter what the Tether market cap is. The BTC market cap is coins x price. If Tethers represent 70% of inflow and they disappear, price is gonna come down. Likely a lot more than 3%.
      - ur-whale 6y ago
        This is addressed in the article. Basically the market cap of BTC is not relevant here, but rather the daily volume.
      - Bellamy 6y ago
        And from the 3% of tether, probably 74% is actually been backed.
  - maxbond 6y ago
    Tether will almost certainly collapse, and then you'll have a lot of bitcoin chasing very few dollars. There is likely to be a stampede for dollars, which becomes a vicious cycle deflating the price of Bitcoin - the liquidity is consumed (Bitfinex is printing Tether because there aren't enough dollars to go around at unbanked exchanges, afterall) at the same time the downward volatility dramatically increases the perception of Bitcoin's risk; market makers start heading for the door; the cost of liquidity becomes massive. There's some magic number for the price of Bitcoin, and it's hard to say what it is, where the miners start to lose money. If it stays too cheap for too long, it puts pressure on the miners to either switch to other coins or get out of the game entirely. Things could get very bad, very quick. The only reason I don't have a bearish position in Bitcoin is that I can't find a counterparty that a.) I can afford at my account size (eg not CME) and b.) that I'm confident will still be around after this crash. Stay cautious. Happy trading.
    - leppr 6y ago
      There are some Defi options on Ethereum that could allow you to short BTC with a USDC [1] collateral, like dYdX [2]. You would need to keep a small amount of ETH to operate the smart contracts, which could fluctuate in dollar value, but even after a black swan event, there's no reason that this decentralized infrastructure would not still be running, allowing you to redeem the USDC to real dollars. [1] Circle dollars, 1:1 backed stablecoin from a well regulated issuer. [2] https://trade.dydx.exchange/perpetual/BTC-USD https://trade.dydx.exchange/perpetual/BTC-USD
      - maxbond 6y ago
        I appreciate the idea, but I neglected to mention (c) is legal in the US. Speculating on bubbles is just out of my league, and I'm okay with that.
ALittleLight 6y ago
I'm not really sure I understand this, neither finance nor crypto is my strong suit, but I think it's saying that most bitcoins are purchased with tether, and if the tethers are fake then that means most of the demand for bitcoin is fake. If the demand falls a lot, the price will too. Not sure if I'm misunderstanding this though. It's hard for me to believe people buying and selling bitcoin wouldn't notice this somehow.
- jimmydorry 6y ago
  I don't believe any significant number of people buying Bitcoin are using Tether. Tether was aimed at the exchanges, institutional level investers, and day traders that wanted to move between dollars and crypto without creating taxable events (this loophole has since been closed). Its primary purpose was touted as allowing exchanges to move US dollars between themselves quickly and without using the banking systems directly. Things may have changed in the last two or so years though, so maybe Tether's role radically changed.
dannyw 6y ago
Tether is lovely for many people, because there are many entry points without AML/KYC. This allows you to trade while minimising your exposure to the taxman, something that many people in crypto value. Of course, there is the calculated risk of Tether being seized, but that's part of doing business. Bitcoin itself was born out of active rebellion with the existing financial system, and depending on who you ask, rebellion of the state itself. Go to a bitcoin meetup that's a few drinks in, and ask how many people pay taxes ;)
- comboy 6y ago
  Please pay taxes. Change the system instead of giving it reasons to put you into jail. I don't think very highly of people who brag about not paying taxes which they are due.
  - ur-whale 6y ago
    Please do your darndest to legally pay the least amount taxes possible and find every opportunity to change the system so taxes are lowered: you tax money will, in the vast majority of the cases, be wasted Stop feeding the beast. Starve it every opportunity you have.
    - spurdoman77 6y ago
      Both opposites of this tax debate spectrum are flawed. Most important thing is to enjoy life. If you focus too much on avoiding taxes, or pay them too much, you are losing. Pay what you pay and only spend resources on tax planning if it makes sense.
    - piva00 6y ago
      I prefer to support Swedish's society and just pay my due taxes, thank you. The beast here is responsible for a lot of the quality of life we enjoy, public services included.
      - ur-whale 6y ago
notahacker 6y ago
Bitcoin is supposed to be a store of value, is it not? If most of this 'value' stored turns out not to be real, the implications for the price of Bitcoin are not good. If the value of USDT falls to nothing then USDT holders trying desperately to offload aren't going to create much demand for BTC, compared with what was being created when new USDT supposedly worth a dollar entered the system every day. And if the price of BTC falls, it isn't a very good store of value any more so people who have traded legitimately earned wealth for BTC have an even stronger incentive to sell. If 70% of gold's daily trading volume was down to orders based on fake gold securities, it would also be a very bad time to hold gold (but at least if you took a big enough loss you'd find someone that wanted it for reasons other than their belief about its ability to hold value) It amazes me how Bitcoiners scream 'hyperinflation' every time the Fed prints more money (with the goal of increasing prices by 2% annually) and yet struggle to understand the relationship between Tether printing dollar-denominated crypto-purchasing vouchers (with the goal of increasing crypto prices by as much as possible) and the supposed dollar price of BTC
tim333 6y ago
The argument basically is tether has been inflating the price of bitcoins. If tether collapses bitcoins will still be there but may trade at $3000/coin rather than $38000. Comparing with gold it's like the price has been inflated by people buying it with forged dollar bills. That said the author seems a bit new to this all with his shock at finding Bob is likely being scammed. Bitcoin has been linked with scams almost from the start, certainly since 2014 with MtGox. Things will go on in spite of the scams.
- BelenusMordred 6y ago
  Why on Earth would $100 billion worth of Tether rushing for a conversion into anything else drag _down_ the price of BTC? Or any other coin for that matter? Have you actually sat down and thought about this, even if 99% waited and cashed out over weeks, that 1% is still a huge injection into the ecosystem. People have been shown time and time again that the money is there, the peg can hold, the underlying company is also a cryptoexchange that can print cash simply by existing and all haters have left is attaching their ego to this notion and clinging to the dream of it going bankrupt over night. And the more they are wrong the more they desperately cling to this idea. Tether had $1B stolen from them when it was a significant % of their assets, along with the US govt taking other funds in the NYAG case and they easily survived, if not thrived. These comments/stories on HN have been here for years and they don't age well, it's hilarious to watch. You can all go short tether or bitcoin today for a fraction of a penny on the dollar, and yet, don't :/ Why not do it, you can hold a bitcoin future going short for the next year less than a coffee per / $1k, why not do that? Would surely make a great story.
  - soneca 6y ago
    > ” you can hold a bitcoin future going short for the next year less than a coffee per / $1k” Genuinely curious about how could I do that. I am not that much into cryptocurrencies, so I appreciate if you have the time and will to be specific in the operationals. I do have a (currently empty) account at Kraken, if that helps. How can I short BTC?
    - 6y ago
ur-whale 6y ago
>when tether is going down wouldn't you want to sell it thus creating pressure in btc/tether market It will only create pressure on exchanges that allow you to actually sell USDT for BTC. These will unfortunately be the same one that will likely go the MTGox route the quickest, leaving you a bag of virtual BTC that you can't withdraw. Not your keys, not your coins, and doubly so for USDT.

by comboy 6y ago

leppr 6y ago

Did you read the article? The author doesn't concluse that Bitcoin in itself is bad, they simply realized by themselves that most of the dollar value increase was caused by Tether, and they fear Tether eventually going down might be a black swan event causing prices to tumble. But 1 BTC = 1 BTC, yes.

comboy 6y ago
Many value increases are irrational, whatever that means, I understand how it can be used to pump the price. I just don't understand how it takes bitcoin with it when collapsing.
- quickthrower2 6y ago
  If tether is pumping BTC then it’ll stop pumping BTC when it’s taken away. Weak hands will fold and then there will be a crash
  - comboy 6y ago
    OK, yes, that's a fair point. But it's not clear to me that pumping being taken away would be a bigger change than people trying to get out of USDT and buying BTC. Also we've been there (mtgox's willy etc). I don't think bitcoin will be much less volatile any time soon. https://www.youtube.com/watch?v=XbZ8zDpX2Mg https://www.youtube.com/watch?v=XbZ8zDpX2Mg
    - leppr 6y ago
      People are not buying BTC to get out of USDT, they're buying other stablecoins and tokens pegged to real world assets. The last week has seen a surge in the price of those tokens compared to USDT. I've made good money arbitraging the bouts of panic.
    - dragonwriter 6y ago
      > But it's not clear to me that pumping being taken away would be a bigger change than people trying to get out of USDT and buying BTC People trying to get out of USDT into BTC because the USDT:USD parity assumption collapses will boost BTC:USDT prices, but probably not enough to avoid dropping BTC:USD, because it would be less than the USDT:USD drop, is the idea.
    - garmaine 6y ago
      How would you sell USDT? You’d buy on a BTC/USDT market. These markets aren’t unified—there are different markets for tether and backed USD. Who would be counterparty to a tether exchange? Thise specific USDT pairings would crash. If they wanted USD (as they presumably do), they’d then crash the other stable coin or backed pairings.
    - TomSwirly 6y ago
      Bitcoin has no fundamental/breakup value and no market maker. In the same way that there's no obvious ceiling to its value, if a lot of people try to get out of it at once, there's no obvious floor either.
  - yeneek 6y ago
    Tether market cap is 24bil, Bitcoin market cap is 714bil. Its just 3%. I think that Tether isn't inflating BTC that much. The institutions that buy BTC like PayPal, Square, JPMorgan have much bigger effect on Bitcoin than Tether.
    - yeneek 6y ago
      JackFr Fair point. Thank you. Well, it will be an interesting week for sure.
    - JackFr 6y ago
      That’s not quite how it’s gonna work. It doesn’t matter what the Tether market cap is. The BTC market cap is coins x price. If Tethers represent 70% of inflow and they disappear, price is gonna come down. Likely a lot more than 3%.
    - ur-whale 6y ago
      This is addressed in the article. Basically the market cap of BTC is not relevant here, but rather the daily volume.
    - Bellamy 6y ago
      And from the 3% of tether, probably 74% is actually been backed.
- maxbond 6y ago
  Tether will almost certainly collapse, and then you'll have a lot of bitcoin chasing very few dollars. There is likely to be a stampede for dollars, which becomes a vicious cycle deflating the price of Bitcoin - the liquidity is consumed (Bitfinex is printing Tether because there aren't enough dollars to go around at unbanked exchanges, afterall) at the same time the downward volatility dramatically increases the perception of Bitcoin's risk; market makers start heading for the door; the cost of liquidity becomes massive. There's some magic number for the price of Bitcoin, and it's hard to say what it is, where the miners start to lose money. If it stays too cheap for too long, it puts pressure on the miners to either switch to other coins or get out of the game entirely. Things could get very bad, very quick. The only reason I don't have a bearish position in Bitcoin is that I can't find a counterparty that a.) I can afford at my account size (eg not CME) and b.) that I'm confident will still be around after this crash. Stay cautious. Happy trading.
  - leppr 6y ago
    There are some Defi options on Ethereum that could allow you to short BTC with a USDC [1] collateral, like dYdX [2]. You would need to keep a small amount of ETH to operate the smart contracts, which could fluctuate in dollar value, but even after a black swan event, there's no reason that this decentralized infrastructure would not still be running, allowing you to redeem the USDC to real dollars. [1] Circle dollars, 1:1 backed stablecoin from a well regulated issuer. [2] https://trade.dydx.exchange/perpetual/BTC-USD https://trade.dydx.exchange/perpetual/BTC-USD
    - maxbond 6y ago
      I appreciate the idea, but I neglected to mention (c) is legal in the US. Speculating on bubbles is just out of my league, and I'm okay with that.

ALittleLight 6y ago

I'm not really sure I understand this, neither finance nor crypto is my strong suit, but I think it's saying that most bitcoins are purchased with tether, and if the tethers are fake then that means most of the demand for bitcoin is fake. If the demand falls a lot, the price will too. Not sure if I'm misunderstanding this though. It's hard for me to believe people buying and selling bitcoin wouldn't notice this somehow.

jimmydorry 6y ago
I don't believe any significant number of people buying Bitcoin are using Tether. Tether was aimed at the exchanges, institutional level investers, and day traders that wanted to move between dollars and crypto without creating taxable events (this loophole has since been closed). Its primary purpose was touted as allowing exchanges to move US dollars between themselves quickly and without using the banking systems directly. Things may have changed in the last two or so years though, so maybe Tether's role radically changed.

dannyw 6y ago

Tether is lovely for many people, because there are many entry points without AML/KYC. This allows you to trade while minimising your exposure to the taxman, something that many people in crypto value. Of course, there is the calculated risk of Tether being seized, but that's part of doing business. Bitcoin itself was born out of active rebellion with the existing financial system, and depending on who you ask, rebellion of the state itself. Go to a bitcoin meetup that's a few drinks in, and ask how many people pay taxes ;)

comboy 6y ago
Please pay taxes. Change the system instead of giving it reasons to put you into jail. I don't think very highly of people who brag about not paying taxes which they are due.
- ur-whale 6y ago
  Please do your darndest to legally pay the least amount taxes possible and find every opportunity to change the system so taxes are lowered: you tax money will, in the vast majority of the cases, be wasted Stop feeding the beast. Starve it every opportunity you have.
  - spurdoman77 6y ago
    Both opposites of this tax debate spectrum are flawed. Most important thing is to enjoy life. If you focus too much on avoiding taxes, or pay them too much, you are losing. Pay what you pay and only spend resources on tax planning if it makes sense.
  - piva00 6y ago
    I prefer to support Swedish's society and just pay my due taxes, thank you. The beast here is responsible for a lot of the quality of life we enjoy, public services included.
    - ur-whale 6y ago

notahacker 6y ago

Bitcoin is supposed to be a store of value, is it not? If most of this 'value' stored turns out not to be real, the implications for the price of Bitcoin are not good. If the value of USDT falls to nothing then USDT holders trying desperately to offload aren't going to create much demand for BTC, compared with what was being created when new USDT supposedly worth a dollar entered the system every day. And if the price of BTC falls, it isn't a very good store of value any more so people who have traded legitimately earned wealth for BTC have an even stronger incentive to sell. If 70% of gold's daily trading volume was down to orders based on fake gold securities, it would also be a very bad time to hold gold (but at least if you took a big enough loss you'd find someone that wanted it for reasons other than their belief about its ability to hold value) It amazes me how Bitcoiners scream 'hyperinflation' every time the Fed prints more money (with the goal of increasing prices by 2% annually) and yet struggle to understand the relationship between Tether printing dollar-denominated crypto-purchasing vouchers (with the goal of increasing crypto prices by as much as possible) and the supposed dollar price of BTC

tim333 6y ago

The argument basically is tether has been inflating the price of bitcoins. If tether collapses bitcoins will still be there but may trade at $3000/coin rather than $38000. Comparing with gold it's like the price has been inflated by people buying it with forged dollar bills. That said the author seems a bit new to this all with his shock at finding Bob is likely being scammed. Bitcoin has been linked with scams almost from the start, certainly since 2014 with MtGox. Things will go on in spite of the scams.

BelenusMordred 6y ago
Why on Earth would $100 billion worth of Tether rushing for a conversion into anything else drag _down_ the price of BTC? Or any other coin for that matter? Have you actually sat down and thought about this, even if 99% waited and cashed out over weeks, that 1% is still a huge injection into the ecosystem. People have been shown time and time again that the money is there, the peg can hold, the underlying company is also a cryptoexchange that can print cash simply by existing and all haters have left is attaching their ego to this notion and clinging to the dream of it going bankrupt over night. And the more they are wrong the more they desperately cling to this idea. Tether had $1B stolen from them when it was a significant % of their assets, along with the US govt taking other funds in the NYAG case and they easily survived, if not thrived. These comments/stories on HN have been here for years and they don't age well, it's hilarious to watch. You can all go short tether or bitcoin today for a fraction of a penny on the dollar, and yet, don't :/ Why not do it, you can hold a bitcoin future going short for the next year less than a coffee per / $1k, why not do that? Would surely make a great story.
- soneca 6y ago
  > ” you can hold a bitcoin future going short for the next year less than a coffee per / $1k” Genuinely curious about how could I do that. I am not that much into cryptocurrencies, so I appreciate if you have the time and will to be specific in the operationals. I do have a (currently empty) account at Kraken, if that helps. How can I short BTC?
  - 6y ago

ur-whale 6y ago

>when tether is going down wouldn't you want to sell it thus creating pressure in btc/tether market It will only create pressure on exchanges that allow you to actually sell USDT for BTC. These will unfortunately be the same one that will likely go the MTGox route the quickest, leaving you a bag of virtual BTC that you can't withdraw. Not your keys, not your coins, and doubly so for USDT.