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Here is a good piece explaining why the data backing that articles arguments is BS: https://medium.com/@nic__carter/assessing-bitcoins-liquidity-with-coinlib-da

by gge 6y ago

Here is a good piece explaining why the data backing that articles arguments is BS: https://medium.com/@nic__carter/assessing-bitcoins-liquidity-with-coinlib-data-is-indefensible-3e5fdad51646 https://medium.com/@nic__carter/assessing-bitcoins-liquidity...

phire 6y ago
On top of the suspect data source, I notice I few more issues with that teather hit piece. 1. They are only looking on the buy sides. They don't even show the sell side with all the people selling their bitcoin back for teather. On most exchanges, the amount of teather buys is roughly equal to the amount of teather sells. People just sit there all day selling back and forwards between teather and bitcoin, trying to take advantages in short-term fluctuations in the price. But by only presenting one side of the trades, that hit piece implies (but never actually claims) that teather is being created out of thin air to buy bitcoin. 2. They misrepresent teather's reserve by implying (and once again not claiming) that it is all cash held in a single bank account in a single Bahamian bank account. (and then pointing out that the value of teather massively exceeds all Bahamian bank holding) In reality, teather claims their reserves are cash and cash equivalents. They only need to hold a small fraction as actual cash for quick withdrawals. And there is a good chance that teather hold cash in multiple bank accounts in multiple countries. It's a huge risk to have it all in a single bank. -------- Personally, I'm not a fan of teather, or cryptocurrencies in general. Teather even admit they don't hold full cash/cash-equivalent reserves, saying in April 2019 they only had 74% cash+equivalent reserves. But I hate misleading journalism way more than I dislike teather. That article is hugely misleading and feels like it's designed to drive the price of bitcoin down so the anonymous author can profit from a short position.
- sillysaurusx 6y ago
  (Psst, it's tether, not teather. Carry on.)
- arcticbull 6y ago
  > In reality, teather claims their reserves are cash and cash equivalents. They only need to hold a small fraction as actual cash for quick withdrawals. And there is a good chance that teather hold cash in multiple bank accounts in multiple countries. It's a huge risk to have it all in a single bank. They haven't burned a single token in the last year. Give or take zero banks in the world want to do business with Tether, they're totally and utterly toxic to USD banking. Tether got shut down by every major bank on the mainland US, one. By. One. It got so bad they started getting rejected by third and fourth tier banks. They had to purchase Noble bank in Puerto Rico to get them onboard. Once Noble's mainland US correspondent bank found out, they got shut down immediately and pushed into insolvency. So they found the sketchiest bank in the entire world, Deltec, chaired by the man who created the Inspector Gadget TV series, Jean Chalopin. Look, I'm not saying they don't have the money, I'm saying I don't believe them, neither should you, and neither should anyone else until they pony up an audit.
  - phire 6y ago
    > They haven't burned a single token in the last year. They burned 1 billion tokens 6 months ago, back in August. Besides, why do people act like not burning tokens is evidence of wrong-doing? That just shows ignorance for how tether have setup their accounts. They have a "treasury account" where tether tokens go when people redeem them, and where they can quickly issue tokens when people deposit cash. They only need to issue more tokens when the treasury account gets low, and they only need to burn tokens when they have an excess in treasury. It makes total sense that in the current bull market that they haven't had the need to burn many tokens. The burn in August only happened because they now have multiple tokens on multiple networks and their TRON treasury account had too much. ------------ All your remaining criticism about banking is 100% valid. And other peoples criticism about auditing and legal troubles. I don't want to write comments on hackernews rebutting claims about Teather. I want the crypto market to go bust again so I can afford a new GPU. But so many people just parrot invalid criticism without understanding it.
    - arcticbull 6y ago
      True, my implicit issue is that Paolo was justifying the Saturday billion tether prints by saying they were often chain swaps. If you’re doing a chain swap and minting new tokens do you not burn the old ones? Maybe I’m misunderstanding.
- user-the-name 6y ago
  > In reality, teather claims their reserves are cash and cash equivalents In reality, Tether claimed that they held full reserves, in cash, audited. Then they failed to ever produce an audit. Then they admitted, in court, that they did not actually have full reserves. Then they admitted that the reserves were not actually in cash, but in "cash and cash equivalents", never specifying what exactly "cash equivalent" meant. So we KNOW for a fact that they have lied repeatedly about their reserves. Why, exactly, would we trust anything they say about those reserves NOW? Why are you assuming they have stopped lying?
- riffraff 6y ago
  > In reality, teather claims their reserves are cash and cash equivalents. FWIW, no, they claim their reserves are > currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities which is pretty different.
arcticbull 6y ago
It actually doesn't really matter. Yes, The Bit Short isn't completely right, but it's right enough that even if you go back and make the corrections to the data, the point remains equally valid. Here's one follow-up piece worth reading that does some statistical analysis: [1]. Nic goes on for days about fake volume. Let's use Bitcoin Trade Volume, which I'm led to believe is a very generous pro-crypto take on the actual volume in the space. It shows 59% USD and 41% USDT. That's not the 75% USDT The Bit Short suggested, but who cares? It's huge. If you sub in those numbers when you're reading The Bit Short, it's just as compelling. Something Nic doesn't care to talk about, slamming the WSJ instead of who he should be pointed at, Paolo Arduino. [1] https://adrianbarwicki.medium.com/impact-of-tether-trading-on-the-bitcoin-price-f915e26c2c44 https://adrianbarwicki.medium.com/impact-of-tether-trading-o... [2] https://www.bitcointradevolume.com/ https://www.bitcointradevolume.com/
- gge 6y ago
  Cope
  - creepto 6y ago
    Is that your reply? Cope? God damn do I love coiners.
- 5600k 6y ago
  Bitcoin still feels like a house of cards. Does anyone remember what happened after everyone said “buy gold”?
  - nivenkos 6y ago
    The biggest tell IMO is that you still can't buy many things with Bitcoin. The transactions are extremely slow, and Steam etc. have even stopped accepting Bitcoin payments. Then where does the value come from? Sure there's a base layer of narcotics trading, etc. but that could switch to other cryptocurrencies too (like Monero). It just feels like a massive pump and dump built over some base layer of illegal transactions (drugs and money laundering).
thecupisblue 6y ago
>I am the cofounder of Coin Metrics, a data business that licenses crypto market data to financial institutions, asset managers, and banks Oh, so his credentials are "my company depends on crypto and if it fails we fail". And he's saying "oh these exchanges arent legit by our metrics we wont count them". That's the exactly the problem and he's saying "put on a blindfold and its gone".
- poontang1 6y ago
  This is a horrible take. Anyone who knows the crypto industry knows many exchanges fake volume and companies like CoinMetrics reduce the noise to get better figures on the actual nature of transactions and liquidity in the industry. Nic Carter knows the data is bullshit because he has a company that specializes in proving such things.
  - nwah1 6y ago
    The false data from exchanges likely is key to the belief that these coins have value, and thus affects the data even from exchanges that aren't noticeably faking data.
- karaterobot 6y ago
  I appreciate skepticism, but attacking someone's credibility isn't as useful as attacking their argument on its merits. Are there points he makes or facts he uses in his article which are themselves invalid or in bad faith?
  - thecupisblue 6y ago
    The basis itself of the article is invalid and it is in "bad faith". I'm not attacking their credibility, I am attacking the thesis in itself. But since the author attacks the author of the original article and the WSJ in their rebuttal, I apply the same here and note that they have a large piece of cake in the play they are talking about and are thus also not objective. So to go to the arguments: 1. Total crypto market isn't just US, on which this rebuttal seems to focus. 2. Is bitcoin price determined only by fiat inflow via "whitelisted" exchanges? Are they the only part of the whole crypto community that matters? The answer is no, and thus we gotta count the whole market. 3. And again, the article completely avoids the problem by saying "there are problematic exchanges but we will ignore them". The problematic exchanges are exactly the problem. They are creating fiat-tied coins with no backing and putting that money into market - which is valued by the amount of money in it. So the "whitehat" exchanges, even tho not directly involved in dirty money, are involved and profit off of the same ecosystem the dirty money is in. Thus, they are not an isolated system and cannot be observed as such and the market cannot be judged on the behaviour of these isolated systems alone. Imagine if this was about gambling and illegal casinos (which in a way, it is). So this article would be written by someone working in Vegas saying "Well, yeah if we're looking at all casinos there is illegal stuff going on and people are printing their own chips and trading them for real Vegas chips, but as a company that counts chips, we only count chips sold in Vegas casinos and we haven't found such problems in Vegas casinos". Would you say "hey but there is a bunch of illegal casinos you are not looking at that print chips which are exchanged at your place for money" or "oh okay this makes sense"?

by gge 6y ago

phire 6y ago

On top of the suspect data source, I notice I few more issues with that teather hit piece. 1. They are only looking on the buy sides. They don't even show the sell side with all the people selling their bitcoin back for teather. On most exchanges, the amount of teather buys is roughly equal to the amount of teather sells. People just sit there all day selling back and forwards between teather and bitcoin, trying to take advantages in short-term fluctuations in the price. But by only presenting one side of the trades, that hit piece implies (but never actually claims) that teather is being created out of thin air to buy bitcoin. 2. They misrepresent teather's reserve by implying (and once again not claiming) that it is all cash held in a single bank account in a single Bahamian bank account. (and then pointing out that the value of teather massively exceeds all Bahamian bank holding) In reality, teather claims their reserves are cash and cash equivalents. They only need to hold a small fraction as actual cash for quick withdrawals. And there is a good chance that teather hold cash in multiple bank accounts in multiple countries. It's a huge risk to have it all in a single bank. -------- Personally, I'm not a fan of teather, or cryptocurrencies in general. Teather even admit they don't hold full cash/cash-equivalent reserves, saying in April 2019 they only had 74% cash+equivalent reserves. But I hate misleading journalism way more than I dislike teather. That article is hugely misleading and feels like it's designed to drive the price of bitcoin down so the anonymous author can profit from a short position.

sillysaurusx 6y ago
(Psst, it's tether, not teather. Carry on.)
arcticbull 6y ago
> In reality, teather claims their reserves are cash and cash equivalents. They only need to hold a small fraction as actual cash for quick withdrawals. And there is a good chance that teather hold cash in multiple bank accounts in multiple countries. It's a huge risk to have it all in a single bank. They haven't burned a single token in the last year. Give or take zero banks in the world want to do business with Tether, they're totally and utterly toxic to USD banking. Tether got shut down by every major bank on the mainland US, one. By. One. It got so bad they started getting rejected by third and fourth tier banks. They had to purchase Noble bank in Puerto Rico to get them onboard. Once Noble's mainland US correspondent bank found out, they got shut down immediately and pushed into insolvency. So they found the sketchiest bank in the entire world, Deltec, chaired by the man who created the Inspector Gadget TV series, Jean Chalopin. Look, I'm not saying they don't have the money, I'm saying I don't believe them, neither should you, and neither should anyone else until they pony up an audit.
- phire 6y ago
  > They haven't burned a single token in the last year. They burned 1 billion tokens 6 months ago, back in August. Besides, why do people act like not burning tokens is evidence of wrong-doing? That just shows ignorance for how tether have setup their accounts. They have a "treasury account" where tether tokens go when people redeem them, and where they can quickly issue tokens when people deposit cash. They only need to issue more tokens when the treasury account gets low, and they only need to burn tokens when they have an excess in treasury. It makes total sense that in the current bull market that they haven't had the need to burn many tokens. The burn in August only happened because they now have multiple tokens on multiple networks and their TRON treasury account had too much. ------------ All your remaining criticism about banking is 100% valid. And other peoples criticism about auditing and legal troubles. I don't want to write comments on hackernews rebutting claims about Teather. I want the crypto market to go bust again so I can afford a new GPU. But so many people just parrot invalid criticism without understanding it.
  - arcticbull 6y ago
    True, my implicit issue is that Paolo was justifying the Saturday billion tether prints by saying they were often chain swaps. If you’re doing a chain swap and minting new tokens do you not burn the old ones? Maybe I’m misunderstanding.
user-the-name 6y ago
> In reality, teather claims their reserves are cash and cash equivalents In reality, Tether claimed that they held full reserves, in cash, audited. Then they failed to ever produce an audit. Then they admitted, in court, that they did not actually have full reserves. Then they admitted that the reserves were not actually in cash, but in "cash and cash equivalents", never specifying what exactly "cash equivalent" meant. So we KNOW for a fact that they have lied repeatedly about their reserves. Why, exactly, would we trust anything they say about those reserves NOW? Why are you assuming they have stopped lying?
riffraff 6y ago
> In reality, teather claims their reserves are cash and cash equivalents. FWIW, no, they claim their reserves are > currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities which is pretty different.

arcticbull 6y ago

It actually doesn't really matter. Yes, The Bit Short isn't completely right, but it's right enough that even if you go back and make the corrections to the data, the point remains equally valid. Here's one follow-up piece worth reading that does some statistical analysis: [1]. Nic goes on for days about fake volume. Let's use Bitcoin Trade Volume, which I'm led to believe is a very generous pro-crypto take on the actual volume in the space. It shows 59% USD and 41% USDT. That's not the 75% USDT The Bit Short suggested, but who cares? It's huge. If you sub in those numbers when you're reading The Bit Short, it's just as compelling. Something Nic doesn't care to talk about, slamming the WSJ instead of who he should be pointed at, Paolo Arduino. [1] https://adrianbarwicki.medium.com/impact-of-tether-trading-on-the-bitcoin-price-f915e26c2c44 https://adrianbarwicki.medium.com/impact-of-tether-trading-o... [2] https://www.bitcointradevolume.com/ https://www.bitcointradevolume.com/

gge 6y ago
Cope
- creepto 6y ago
  Is that your reply? Cope? God damn do I love coiners.
5600k 6y ago
Bitcoin still feels like a house of cards. Does anyone remember what happened after everyone said “buy gold”?
- nivenkos 6y ago
  The biggest tell IMO is that you still can't buy many things with Bitcoin. The transactions are extremely slow, and Steam etc. have even stopped accepting Bitcoin payments. Then where does the value come from? Sure there's a base layer of narcotics trading, etc. but that could switch to other cryptocurrencies too (like Monero). It just feels like a massive pump and dump built over some base layer of illegal transactions (drugs and money laundering).

thecupisblue 6y ago

>I am the cofounder of Coin Metrics, a data business that licenses crypto market data to financial institutions, asset managers, and banks Oh, so his credentials are "my company depends on crypto and if it fails we fail". And he's saying "oh these exchanges arent legit by our metrics we wont count them". That's the exactly the problem and he's saying "put on a blindfold and its gone".

poontang1 6y ago
This is a horrible take. Anyone who knows the crypto industry knows many exchanges fake volume and companies like CoinMetrics reduce the noise to get better figures on the actual nature of transactions and liquidity in the industry. Nic Carter knows the data is bullshit because he has a company that specializes in proving such things.
- nwah1 6y ago
  The false data from exchanges likely is key to the belief that these coins have value, and thus affects the data even from exchanges that aren't noticeably faking data.
karaterobot 6y ago
I appreciate skepticism, but attacking someone's credibility isn't as useful as attacking their argument on its merits. Are there points he makes or facts he uses in his article which are themselves invalid or in bad faith?
- thecupisblue 6y ago
  The basis itself of the article is invalid and it is in "bad faith". I'm not attacking their credibility, I am attacking the thesis in itself. But since the author attacks the author of the original article and the WSJ in their rebuttal, I apply the same here and note that they have a large piece of cake in the play they are talking about and are thus also not objective. So to go to the arguments: 1. Total crypto market isn't just US, on which this rebuttal seems to focus. 2. Is bitcoin price determined only by fiat inflow via "whitelisted" exchanges? Are they the only part of the whole crypto community that matters? The answer is no, and thus we gotta count the whole market. 3. And again, the article completely avoids the problem by saying "there are problematic exchanges but we will ignore them". The problematic exchanges are exactly the problem. They are creating fiat-tied coins with no backing and putting that money into market - which is valued by the amount of money in it. So the "whitehat" exchanges, even tho not directly involved in dirty money, are involved and profit off of the same ecosystem the dirty money is in. Thus, they are not an isolated system and cannot be observed as such and the market cannot be judged on the behaviour of these isolated systems alone. Imagine if this was about gambling and illegal casinos (which in a way, it is). So this article would be written by someone working in Vegas saying "Well, yeah if we're looking at all casinos there is illegal stuff going on and people are printing their own chips and trading them for real Vegas chips, but as a company that counts chips, we only count chips sold in Vegas casinos and we haven't found such problems in Vegas casinos". Would you say "hey but there is a bunch of illegal casinos you are not looking at that print chips which are exchanged at your place for money" or "oh okay this makes sense"?