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> ndependently verify at specific points in time that the entire supply of Paxos Standard tokens is consistent with USD in reserve accounts at U.S. banks held a

> ndependently verify at specific points in time that the entire supply of Paxos Standard tokens is consistent with USD in reserve accounts at U.S. banks held and managed by Paxos. Where are all the people holding all the USDT? It seems nobody is complaining. I'm bearish on BTC price right now but can't help thinking someone should have already cracked the USDT wide open. Eventually someone (few brokers) will be left holding USDT with no buyers. I can't believe brokers are allowing people to cash out w/o guarantee the stable coins they redeem can are not cashable somewhere.

graeme 6y ago
Excellent question, why haven’t tether holders lost confidence? Part of the answer I think is that you can lock up Tether at 12+% interest. So the system encourages withdrawing tethers from the system, at unsustainable savings rates. https://bitcompare.net/coins/tether/savings-interest-rates https://bitcompare.net/coins/tether/savings-interest-rates The other part is that it is not easy to directly trade USDT for USD. Kraken is the only place you can do so directly, it is the only place the peg is directly tested. Apart from that to get USD you need to trade to something else, like BTC or ETH, and then sell that for dollars. The only people likely to have held USDT are also likely to be long crypto, so not surprising they wouldn’t cash out. The better question is who are selling their BTC/ETH for Tether, and what do they do with the money after? Surely the locked in savings are part of the answer: interest rates on stablecoins are much higher than on BTC/ETH. But I don’t think it is the whole answer. Presumably enough people don’t question the peg that it can stay afloat for now.
- cfcosta 6y ago
  >The other part is that it is not easy to directly trade USDT for USD. Kraken is the only place you can do so directly, it is the only place the peg is directly tested. Apart from that to get USD you need to trade to something else, like BTC or ETH, and then sell that for dollars. What do you mean? I trade USDC and USDT from and to Fiat using Binance, and it's a breeze. I get the funds directly on my bank account in 5 minutes or so, and I imagine the same happens on Kraken, coinbase pro, gemini/blockfi.
  - graeme 6y ago
    Interesting I was under the impression you couldn’t. Does Binance have a USDT/USD trading pair? If not, what are the mechanics of trading from USDT to fiat?
    - cfcosta 6y ago
      Hey, I didn't see your reply, sorry! But yes, Binance does have a USDT/USD trading pair. Then you just withdraw to your bank account (the mechanics of this vary by country).
- gruez 6y ago
  >Part of the answer I think is that you can lock up Tether at 12+% interest. So the system encourages withdrawing tethers from the system, at unsustainable savings rates. I'm not convinced. Were these products around a few years ago when people were sounding the alarm bells about tether?

graeme 6y ago

Excellent question, why haven’t tether holders lost confidence? Part of the answer I think is that you can lock up Tether at 12+% interest. So the system encourages withdrawing tethers from the system, at unsustainable savings rates. https://bitcompare.net/coins/tether/savings-interest-rates https://bitcompare.net/coins/tether/savings-interest-rates The other part is that it is not easy to directly trade USDT for USD. Kraken is the only place you can do so directly, it is the only place the peg is directly tested. Apart from that to get USD you need to trade to something else, like BTC or ETH, and then sell that for dollars. The only people likely to have held USDT are also likely to be long crypto, so not surprising they wouldn’t cash out. The better question is who are selling their BTC/ETH for Tether, and what do they do with the money after? Surely the locked in savings are part of the answer: interest rates on stablecoins are much higher than on BTC/ETH. But I don’t think it is the whole answer. Presumably enough people don’t question the peg that it can stay afloat for now.

cfcosta 6y ago
>The other part is that it is not easy to directly trade USDT for USD. Kraken is the only place you can do so directly, it is the only place the peg is directly tested. Apart from that to get USD you need to trade to something else, like BTC or ETH, and then sell that for dollars. What do you mean? I trade USDC and USDT from and to Fiat using Binance, and it's a breeze. I get the funds directly on my bank account in 5 minutes or so, and I imagine the same happens on Kraken, coinbase pro, gemini/blockfi.
- graeme 6y ago
  Interesting I was under the impression you couldn’t. Does Binance have a USDT/USD trading pair? If not, what are the mechanics of trading from USDT to fiat?
  - cfcosta 6y ago
    Hey, I didn't see your reply, sorry! But yes, Binance does have a USDT/USD trading pair. Then you just withdraw to your bank account (the mechanics of this vary by country).
gruez 6y ago
>Part of the answer I think is that you can lock up Tether at 12+% interest. So the system encourages withdrawing tethers from the system, at unsustainable savings rates. I'm not convinced. Were these products around a few years ago when people were sounding the alarm bells about tether?