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Really good article, recommended read for anyone interested in crypto. For me, it's almost 100% aligned with what I've felt was going on with Tether in the las

Really good article, recommended read for anyone interested in crypto. For me, it's almost 100% aligned with what I've felt was going on with Tether in the last 2 years. Also, it sort of crystallized an answer to a question I've had about Binance for quite a while: how did they manage to get so big, so fast. Answer: easy, they never had to establish proper on and off ramps to the traditional banking system and lured customers with unreasonable leveraged offers (which BTW is another Tether-related scam in itself: if you are an exchange with a shit ton of USDT, you can manipulate the price up and down, and trigger artificial margin calls whenever you damn please). The real interesting question is though: what will happen when (not if) Tether explodes. There will be a sudden huge demand for exiting from USDT, and the only way looks like buying BTC on semi or fully fraudulent unbanked exchanges (good luck with that). This will also trigger a big price unbalance between exchanges, and it remains to be seen if arbitrage channels will be able to weather the storm and if so for how long. If you hold USDT, better get out quick unless you want to be left holding the bag. If you hold BTC (as in: for real, in your own wallet, not on some shady exchange, not your keys not your coins), it's likely the BTC ecosystem is going to undergo a very large "event". Up or down, who knows. If you hold BTC on an exchange, especially a shady one with 100x leverage type offerings, get your coins out of there ASAP before you get BTC-E'd [1] [1]: https://en.wikipedia.org/wiki/BTC-e https://en.wikipedia.org/wiki/BTC-e

pjc50 6y ago
> it's likely the BTC ecosystem is going to undergo a very large "event". Up or down, who knows. This seems to be one constant of BTC: "events" which you might expect to have a negative effect on the price often don't.
- qeternity 6y ago
  ...because Tether has been there to ensure that.
leppr 6y ago
> it sort of crystallized an answer to a question I've had about Binance for quite a while: how did they manage to get so big, so fast. ... No, Binance didn't get big because of Tether or leverage. It was already eating most of the crypto-only exchanges volume when altcoins were almost exclusively paired with BTC and before it acquired its perpetual futures business. The main reason they managed to attract so many users is flamboyant altcoin pump and dumps orchestrated with ICO teams and Chinese whales, and pioneering exchange coins with the securities/utility token mash-up called BNB. Users came to chase the pumps, and stayed when they were invested in the platform itself. Binance's thriving in its later phase even as Coinbase ramped up its altcoin listings can certainly be attributed to Tether though.
- gomox 6y ago
  Also Binance is quite simply a better exchange. It works flawlessly even when the market is hot. The quality of what they've developed and the speed at which they did it makes the average silicon valley team look like 7 year olds.
  - leppr 6y ago
    Most of what they developed is customization over white label solutions (that's how the main exchange was started), and acquisitions. The UI is a convoluted mash-up of different systems. Try using their margin trading. They're spending very little on in-house software development compared to their revenue and the average SV company of that size, and it shows. > It works flawlessly even when the market is hot. That's factually false. It holds up better than Coinbase sure, that's not hard, but it very frequently gets overwhelmed during volume spikes. The web UI and the various price feeds often fall behind. The orderbook feed falls out of sync even during normal usage hours. The more robust part of their stack, the trading API, rarely goes down though, I'll give you that. I guess your comment makes my point about BNB. It's a great way to keep customers loyal and engaged. I do agree that overall it is the best cryptocurrency exchange, but let's not use HN as a shilling avenue.
    - dannyw 6y ago
      1. I don't hold BNB. 2. I have had way less problems with Binance than Coinbase, so I am a happy Binance customer.
      - leppr 6y ago
        The bar is low with Coinbase, and I was replying to a specific unwarranted praise about Binance, already mentioning that it's indeed arguably the best exchange overall.
    - gomox 6y ago
      Lol. I hold precisely 0 BNB, and never did. These guys are execution masters, and the proof is in the pudding.
cryptoanonymous 6y ago
Author here. I really appreciate your kind words about the post - thank you! I'm also broadly in agreement with your conclusions as to what this means for a crypto trader or holder. I've zeroed my net exposure to this ecosystem myself, both in anticipation for such an event, and out of recognition that I frankly understand it far less well than I originally thought.
- christiansakai 6y ago
  I am not a Bitcoin holder, but Ethereum. I zeroed all my Ethereum except the ones locked due to staking (32 ETH, but I bought them when they were $600) because of these Tether news lately. I will wait for more clarity before jumping back in. It is kinda sad that in this technology there are so many frauds like that.
  - ur-whale 6y ago
    >I will wait for more clarity before jumping back in. Probably wise given how correlated ETH and BTC prices are. >It is kinda sad that in this technology there are so many frauds like that. It is, but it is also unavoidable. As the author correctly points at towards the end, many of the properties of cryptos (high liquidity, non-reversible, pseudo-anonymous), while very useful to legitimate users, are a wet dream for crooks. As a matter of fact, Bitcoin has been used to scam people for its entire existence, e.g.[1][2], sometimes even in new and innovative ways. There is one aspect of Bitcoin that many people entirely overlook, especially newcomers: [3] [1] https://en.bitcoin.it/wiki/Trendon_Shavers https://en.bitcoin.it/wiki/Trendon_Shavers [2] https://archive.is/PZdxu https://archive.is/PZdxu [3] http://trilema.com/2013/the-story-of-pointless-and-witless/ http://trilema.com/2013/the-story-of-pointless-and-witless/
    - christiansakai 6y ago
      Indeed. It is part of the game I guess.
- mikewarot 6y ago
  Long ago I spent $100 on a graphics card, and mined 1 Bitcoin over the course of a year... then lost it on MtGox... that was a cheap lesson compared to what appears set to happen. Thanks for taking the time and effort to put this together. I'm sure it'll help some people avoid a costly lesson.
DeafSquid 6y ago
I got out of BTC-E shortly before they shut down. Gambled my gains on stocks and lost. Oops

pjc50 6y ago

> it's likely the BTC ecosystem is going to undergo a very large "event". Up or down, who knows. This seems to be one constant of BTC: "events" which you might expect to have a negative effect on the price often don't.

qeternity 6y ago
...because Tether has been there to ensure that.

leppr 6y ago

> it sort of crystallized an answer to a question I've had about Binance for quite a while: how did they manage to get so big, so fast. ... No, Binance didn't get big because of Tether or leverage. It was already eating most of the crypto-only exchanges volume when altcoins were almost exclusively paired with BTC and before it acquired its perpetual futures business. The main reason they managed to attract so many users is flamboyant altcoin pump and dumps orchestrated with ICO teams and Chinese whales, and pioneering exchange coins with the securities/utility token mash-up called BNB. Users came to chase the pumps, and stayed when they were invested in the platform itself. Binance's thriving in its later phase even as Coinbase ramped up its altcoin listings can certainly be attributed to Tether though.

gomox 6y ago
Also Binance is quite simply a better exchange. It works flawlessly even when the market is hot. The quality of what they've developed and the speed at which they did it makes the average silicon valley team look like 7 year olds.
- leppr 6y ago
  Most of what they developed is customization over white label solutions (that's how the main exchange was started), and acquisitions. The UI is a convoluted mash-up of different systems. Try using their margin trading. They're spending very little on in-house software development compared to their revenue and the average SV company of that size, and it shows. > It works flawlessly even when the market is hot. That's factually false. It holds up better than Coinbase sure, that's not hard, but it very frequently gets overwhelmed during volume spikes. The web UI and the various price feeds often fall behind. The orderbook feed falls out of sync even during normal usage hours. The more robust part of their stack, the trading API, rarely goes down though, I'll give you that. I guess your comment makes my point about BNB. It's a great way to keep customers loyal and engaged. I do agree that overall it is the best cryptocurrency exchange, but let's not use HN as a shilling avenue.
  - dannyw 6y ago
    1. I don't hold BNB. 2. I have had way less problems with Binance than Coinbase, so I am a happy Binance customer.
    - leppr 6y ago
      The bar is low with Coinbase, and I was replying to a specific unwarranted praise about Binance, already mentioning that it's indeed arguably the best exchange overall.
  - gomox 6y ago
    Lol. I hold precisely 0 BNB, and never did. These guys are execution masters, and the proof is in the pudding.

cryptoanonymous 6y ago

Author here. I really appreciate your kind words about the post - thank you! I'm also broadly in agreement with your conclusions as to what this means for a crypto trader or holder. I've zeroed my net exposure to this ecosystem myself, both in anticipation for such an event, and out of recognition that I frankly understand it far less well than I originally thought.

christiansakai 6y ago
I am not a Bitcoin holder, but Ethereum. I zeroed all my Ethereum except the ones locked due to staking (32 ETH, but I bought them when they were $600) because of these Tether news lately. I will wait for more clarity before jumping back in. It is kinda sad that in this technology there are so many frauds like that.
- ur-whale 6y ago
  >I will wait for more clarity before jumping back in. Probably wise given how correlated ETH and BTC prices are. >It is kinda sad that in this technology there are so many frauds like that. It is, but it is also unavoidable. As the author correctly points at towards the end, many of the properties of cryptos (high liquidity, non-reversible, pseudo-anonymous), while very useful to legitimate users, are a wet dream for crooks. As a matter of fact, Bitcoin has been used to scam people for its entire existence, e.g.[1][2], sometimes even in new and innovative ways. There is one aspect of Bitcoin that many people entirely overlook, especially newcomers: [3] [1] https://en.bitcoin.it/wiki/Trendon_Shavers https://en.bitcoin.it/wiki/Trendon_Shavers [2] https://archive.is/PZdxu https://archive.is/PZdxu [3] http://trilema.com/2013/the-story-of-pointless-and-witless/ http://trilema.com/2013/the-story-of-pointless-and-witless/
  - christiansakai 6y ago
    Indeed. It is part of the game I guess.
mikewarot 6y ago
Long ago I spent $100 on a graphics card, and mined 1 Bitcoin over the course of a year... then lost it on MtGox... that was a cheap lesson compared to what appears set to happen. Thanks for taking the time and effort to put this together. I'm sure it'll help some people avoid a costly lesson.

DeafSquid 6y ago

I got out of BTC-E shortly before they shut down. Gambled my gains on stocks and lost. Oops