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Tether: Unchained Credit on the Blockchain
- jqpabc123 6y agoBitcoin pump and dump. 1) Slowly accumulate bitcoin. 2) Mint stable coins and "loan" them to certain big customers (i.e. players in this scheme). Note that the only "backing" of these coins is just a promise --- not USD. 3) Big customers/players use "loaned" stable coin to buy bitcoin --- thus inflating bitcoin price. 4) Small investors/speculators see rising bitcoin and jump in to buy inflating price even more. 5) All together now --- sell bitcoin at inflated prices. Profit! 6) Stop minting and "loaning" stable coins. Bitcoin drops. Naive small investors get screwed. 7) Repeat at step 1. What facilitates this scheme is people accept the fiction that the stable coin is 100% backed by USD. Doing this in any "regulated" market would subject you to a huge fine, prison time or both.