6 ms·

55% of all Tether, $25B, were created in 2021

50 points by daolf 5y ago

Black101 5y ago
Almost as bad as some governments, the way they are printing money...
- mannykannot 5y ago
  So you are suggesting that bitcoin, far from having shed the problems of government-issued currency, is going through the process by which irresponsible governments can destroy a currency.
  - jariel 5y ago
    "far from having shed the problems of government-issued currency," Government currency is backed by assets, or the governments ability to pay debt. BTC is backed by nothing and they issue currency on the basis the ability to do fancy math problems. So which currency has a 'problem' now?
  - yowlingcat 5y ago
    Reminds me of a Matt Levine quote: "It is not original to me, but one thing that I think and write a lot is that cryptocurrency enthusiasts keep re-learning the lessons that regular finance learned decades ago, and that you can see a lot of financial history replaying itself, sped up, by observing cryptocurrency." I see this play out a lot. While ironic, it is (to your point) instructive to see the cryptocurrency ecosystem learn the same lessons of traditional financial history all over again. [1] https://www.bloomberg.com/opinion/articles/2018-05-16/high-frequency-trading-for-bitcoins https://www.bloomberg.com/opinion/articles/2018-05-16/high-f...
    - Black101 5y ago
      But Tether is not a traditional cryptocurrency and has nothing to do with Bitcoin besides the fact that they buy Bitcoins with Tethers... the creators can issue as much of it as they want, just like the governments.
  - Black101 5y ago
    > So you are suggesting that bitcoin, far from having shed the problems of government-issued currency, is going through the process by which irresponsible governments can destroy a currency. As far as I know, Thether is not Bitcoin and coins are issued randomly (usually, multiple times a week) by the creators, unlike Bitcoin. There is no proof of work, or proof of stake here... just plain issuing "pre-mined" coins. A bit like the currency in most countries nowadays. I have no clue why Bitcoin was brought up. Look at this: https://twitter.com/search?q=%22minted%20at%20Tether%20Treasury%22%20%20(from%3Awhale_alert)&src=typed_query&f=live https://twitter.com/search?q=%22minted%20at%20Tether%20Treas... It is nuts.
  - imtringued 5y ago
    It's the reverse. Someone prints counterfeit USD and convinces everyone that they are just as good as the real thing.
makomk 5y ago
I was curious how this compared with USDC, the smaller but also more reputable tokenized US Dollar service affiliated with Coinbase. It looks like 65% of that was created in 2021.
- graeme 5y ago
  USDC is seriously late on their attestations too: https://www.centre.io/usdc-transparency https://www.centre.io/usdc-transparency Last one was January 31st at $6 billion. There are now $11.3 billion USDC.
- PKop 5y ago
  Yea I'm not sure why we should be surprised that in another bull market where BTC is well above previous all time highs and DeFi protcols have billions in deposits, that "most" of Tether would have been minted this year. It's like they haven't considered that if Tether was theoretically 100% above board that quoted statistic would still be true. "What would legitimate look like?" in other words.
delaaxe 5y ago
Those USDTs weren't "created" per se, they were just converted from regular USD which were created out of thin air
- mcherm 5y ago
  Do you have any evidence that they were, in fact, created from USD? Given the strong incentives to produce such evidence and the complete lack of it I am highly skeptical.
  - afarviral 5y ago
    I think it was a comment that fiat itself is created from thin air since it is the social contract of accepted value which gives any currency its value. It could be just made up numbers or more legit, it doesn't matter because people act on the belief that it is worth its US equivalent ... therefore it is.
    - imtringued 5y ago
      The problem is that you cannot spend TUSD directly, if paypal accepted it or your local grocery store accepted it nobody would question its authenticity. However, since TUSD has to be converted to USD this assumption is just wishful thinking.
  - delaaxe 5y ago
    They were audited and it was found that every USDT was backed 1:1 with a fiat equivalent, why am I getting downvoted?
- geonnave 5y ago
  Serious question: what happens when I buy USDT using another currency than USD? e.g. EUR or BRL. How can USDT maintain its parity with USD under such circunstances?
  - delaaxe 5y ago
    That would be just a regular trade like BTC/USDT. No issuance of new USDT backed with real USD
Geee 5y ago
That just shows how much money flows in cryptocurrencies. Tether and USDC represent tokenized dollar deposits on exchanges.
- heterodoxxed 5y ago
  It's incumbent on them to prove that. So far, there is little evidence that they are backed by anywhere near the dollars they claim.
tsujp 5y ago
1 USDT is meant to represent 1 USD in the bank in the custody of Tether. In 2019 Tether was proven to be only 74% backed by fiat and fiat-equivalent assets: https://www.coindesk.com/tether-lawyer-confirms-stablecoin-74-percent-backed-by-cash-and-equivalents https://www.coindesk.com/tether-lawyer-confirms-stablecoin-7... This means it's not 74 literal cents per USDT but some proportion of a liquid asset and fiat. Tether has long since refused to release any concrete of proof of reserve and even when they were heavily pressured to only admitted to a lack thereof (74% in 2019 and that 74% isn't even fiat-only). Tether is nothing but bad for the crypto-space as when it eventually DOES collapse a lot of people are going to find themselves holding something, USDT, which isn't as backed as they thought it was. Would you give me a dollar right now if I gave you back 74 cents? The only sensible stable crypto asset is DAI from the MakerDAO which has been battle tested and proven under the worst possible scenarios (2017/2018 bullmarket crash) where it still held it's peg. I don't know how this extends to USDC etc but for USDT I wouldn't touch it with a 20 foot pole.
- jariel 5y ago
  BTC has nothing backing it whatsoever. The crypto space doesn't seem to mind. The minds managing the crypto space have never depended on reason or financial integrity, just a means to excite the masses onto their scheme.
  - Lordarminius 5y ago
    > BTC has nothing backing it whatsoever.... Bitcoin can be verified and cannot be forged or arbitrarily created. That is its backing. What is the backing of the US dollar at this point asides from threat of violence against challengers ?
    - ameister14 5y ago
      Aside from the very thing that is the foundation of all large societies, you mean? What does it need other than that?
    - Vespasian 5y ago
johndoe42377 5y ago
Supply and demand, why? Some demand comes from retail, who wants to convert their crypto or USD into it, other demand comes from a exchanges, of course, and yet another from whoever it was for whatever they want. Of course, on a retail side the meme "1 usdt = 1 USD" will "hold", because it is a meme "social contract" in which normies believe. However, on the exchange and crooks side there could be almost arbitrary arrangements, including bulk discounts, long term loans, etc. This is what lack of transparency is for. We could easily argue that comparable amount has been used by retail, because the whole Ponzi is to sell to them. They always pay a full price plus fees.
mam2 5y ago
Who still cares about fundentals in 2021 tho ?
zilebune 5y ago
Perhaps a controversial view, but why does this matter? I was having this debate with a friend a few weeks back. Tether was the first crypto coin pegged to a fiat currency, but now there are so many more: USDC, BUSD, TrueUSD, DAI, GUSD...and that's just a fraction of the ones pegged to $USD. The entire market's _daily volume_ is 5+ times the entire Tether cap. Plus you have Automated Market Makers (Uniswap & co.) where you can trade directly between crypto pairs and even Binance/Crypto.com debit cards which ensure a closed circulation loop for stablecoins within the exchanges. If it turns out that Tether is printing USDT without backing anymore how would this impact the crypto market? I expect another USD stablecoin would just take its place and life would go on. Crypto trading/hodling is just too irresistible at this point. The last _3 months_ saw $1Tn of new money poured into crypto from all sides. I would be curious to know what does HN genuinely think about this USDT controversy, if possible without the shilling and emotion?
- garmaine 5y ago
  .
  - anonymoushn 5y ago
    How? If a USDT-denominated exchange holds a certain amount of USDT and a certain amount of other cryptocurrencies, a change in the dollar value of USDT won't make them unable to make customers whole.
- ameister14 5y ago
  Did you follow the archegos capital implosion? That's what happens on a smaller scale than tether. What you'll get is a price drop, a pretty significant one, because it will happen suddenly. There is no foundation for the current prices of cryptocurrency, so if people get the impression that its propped up by frauds it runs the risk of dropping precipitously. Also, I think you underestimate the follow-on effects of 20% of a market's daily trading volume pulled out of a market all at once.
  - zilebune 5y ago
jonplackett 5y ago
It seems to me the debate is no long whether tether is a scam, it’s just if anyone cares it’s a scam.
TicklishTiger 5y ago
About 40% of all Dollars were created in 2020: https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
- shkkmo 5y ago
  That chart shows the federal reserve assets, not the total supply of dollars. It's a pretty interesting chart, but it doesn't support the statistic you quoted.
  - zoshi 5y ago
    The chart for M1 (currency, demand deposits, and other liquid deposits) looks similar: https://fred.stlouisfed.org/series/M1 https://fred.stlouisfed.org/series/M1 That's about 30% of all US money supply created in 2020.
    - shkkmo 5y ago
      I'm sorry, I don't have enough information on what those statistics mean. I'm not sure what that chart measures, but it shows a 4x increase in early 2020 which leads me to think it isn't saying what you think it's saying. While I don't doubt it relates to how the Fed manages the money supply, it doesn't say what you want it to say. If you are going to sell this point, you need a source that undstands and can break down the subject matter to explain what these charts are measuring and how that relates to the supply of US currency.
  - TicklishTiger 5y ago
    The Fed is the only source of Dollars. Banks only produce IOUs.

50 points by daolf 5y ago

Black101 5y ago

Almost as bad as some governments, the way they are printing money...

mannykannot 5y ago
So you are suggesting that bitcoin, far from having shed the problems of government-issued currency, is going through the process by which irresponsible governments can destroy a currency.
- jariel 5y ago
  "far from having shed the problems of government-issued currency," Government currency is backed by assets, or the governments ability to pay debt. BTC is backed by nothing and they issue currency on the basis the ability to do fancy math problems. So which currency has a 'problem' now?
- yowlingcat 5y ago
  Reminds me of a Matt Levine quote: "It is not original to me, but one thing that I think and write a lot is that cryptocurrency enthusiasts keep re-learning the lessons that regular finance learned decades ago, and that you can see a lot of financial history replaying itself, sped up, by observing cryptocurrency." I see this play out a lot. While ironic, it is (to your point) instructive to see the cryptocurrency ecosystem learn the same lessons of traditional financial history all over again. [1] https://www.bloomberg.com/opinion/articles/2018-05-16/high-frequency-trading-for-bitcoins https://www.bloomberg.com/opinion/articles/2018-05-16/high-f...
  - Black101 5y ago
    But Tether is not a traditional cryptocurrency and has nothing to do with Bitcoin besides the fact that they buy Bitcoins with Tethers... the creators can issue as much of it as they want, just like the governments.
- Black101 5y ago
  > So you are suggesting that bitcoin, far from having shed the problems of government-issued currency, is going through the process by which irresponsible governments can destroy a currency. As far as I know, Thether is not Bitcoin and coins are issued randomly (usually, multiple times a week) by the creators, unlike Bitcoin. There is no proof of work, or proof of stake here... just plain issuing "pre-mined" coins. A bit like the currency in most countries nowadays. I have no clue why Bitcoin was brought up. Look at this: https://twitter.com/search?q=%22minted%20at%20Tether%20Treasury%22%20%20(from%3Awhale_alert)&src=typed_query&f=live https://twitter.com/search?q=%22minted%20at%20Tether%20Treas... It is nuts.
- imtringued 5y ago
  It's the reverse. Someone prints counterfeit USD and convinces everyone that they are just as good as the real thing.

makomk 5y ago

I was curious how this compared with USDC, the smaller but also more reputable tokenized US Dollar service affiliated with Coinbase. It looks like 65% of that was created in 2021.

graeme 5y ago
USDC is seriously late on their attestations too: https://www.centre.io/usdc-transparency https://www.centre.io/usdc-transparency Last one was January 31st at $6 billion. There are now $11.3 billion USDC.
PKop 5y ago
Yea I'm not sure why we should be surprised that in another bull market where BTC is well above previous all time highs and DeFi protcols have billions in deposits, that "most" of Tether would have been minted this year. It's like they haven't considered that if Tether was theoretically 100% above board that quoted statistic would still be true. "What would legitimate look like?" in other words.

delaaxe 5y ago

Those USDTs weren't "created" per se, they were just converted from regular USD which were created out of thin air

mcherm 5y ago
Do you have any evidence that they were, in fact, created from USD? Given the strong incentives to produce such evidence and the complete lack of it I am highly skeptical.
- afarviral 5y ago
  I think it was a comment that fiat itself is created from thin air since it is the social contract of accepted value which gives any currency its value. It could be just made up numbers or more legit, it doesn't matter because people act on the belief that it is worth its US equivalent ... therefore it is.
  - imtringued 5y ago
    The problem is that you cannot spend TUSD directly, if paypal accepted it or your local grocery store accepted it nobody would question its authenticity. However, since TUSD has to be converted to USD this assumption is just wishful thinking.
- delaaxe 5y ago
  They were audited and it was found that every USDT was backed 1:1 with a fiat equivalent, why am I getting downvoted?
geonnave 5y ago
Serious question: what happens when I buy USDT using another currency than USD? e.g. EUR or BRL. How can USDT maintain its parity with USD under such circunstances?
- delaaxe 5y ago
  That would be just a regular trade like BTC/USDT. No issuance of new USDT backed with real USD

Geee 5y ago

That just shows how much money flows in cryptocurrencies. Tether and USDC represent tokenized dollar deposits on exchanges.

heterodoxxed 5y ago
It's incumbent on them to prove that. So far, there is little evidence that they are backed by anywhere near the dollars they claim.

tsujp 5y ago

1 USDT is meant to represent 1 USD in the bank in the custody of Tether. In 2019 Tether was proven to be only 74% backed by fiat and fiat-equivalent assets: https://www.coindesk.com/tether-lawyer-confirms-stablecoin-74-percent-backed-by-cash-and-equivalents https://www.coindesk.com/tether-lawyer-confirms-stablecoin-7... This means it's not 74 literal cents per USDT but some proportion of a liquid asset and fiat. Tether has long since refused to release any concrete of proof of reserve and even when they were heavily pressured to only admitted to a lack thereof (74% in 2019 and that 74% isn't even fiat-only). Tether is nothing but bad for the crypto-space as when it eventually DOES collapse a lot of people are going to find themselves holding something, USDT, which isn't as backed as they thought it was. Would you give me a dollar right now if I gave you back 74 cents? The only sensible stable crypto asset is DAI from the MakerDAO which has been battle tested and proven under the worst possible scenarios (2017/2018 bullmarket crash) where it still held it's peg. I don't know how this extends to USDC etc but for USDT I wouldn't touch it with a 20 foot pole.

jariel 5y ago
BTC has nothing backing it whatsoever. The crypto space doesn't seem to mind. The minds managing the crypto space have never depended on reason or financial integrity, just a means to excite the masses onto their scheme.
- Lordarminius 5y ago
  > BTC has nothing backing it whatsoever.... Bitcoin can be verified and cannot be forged or arbitrarily created. That is its backing. What is the backing of the US dollar at this point asides from threat of violence against challengers ?
  - ameister14 5y ago
    Aside from the very thing that is the foundation of all large societies, you mean? What does it need other than that?
  - Vespasian 5y ago

johndoe42377 5y ago

Supply and demand, why? Some demand comes from retail, who wants to convert their crypto or USD into it, other demand comes from a exchanges, of course, and yet another from whoever it was for whatever they want. Of course, on a retail side the meme "1 usdt = 1 USD" will "hold", because it is a meme "social contract" in which normies believe. However, on the exchange and crooks side there could be almost arbitrary arrangements, including bulk discounts, long term loans, etc. This is what lack of transparency is for. We could easily argue that comparable amount has been used by retail, because the whole Ponzi is to sell to them. They always pay a full price plus fees.

mam2 5y ago

Who still cares about fundentals in 2021 tho ?

zilebune 5y ago

Perhaps a controversial view, but why does this matter? I was having this debate with a friend a few weeks back. Tether was the first crypto coin pegged to a fiat currency, but now there are so many more: USDC, BUSD, TrueUSD, DAI, GUSD...and that's just a fraction of the ones pegged to $USD. The entire market's _daily volume_ is 5+ times the entire Tether cap. Plus you have Automated Market Makers (Uniswap & co.) where you can trade directly between crypto pairs and even Binance/Crypto.com debit cards which ensure a closed circulation loop for stablecoins within the exchanges. If it turns out that Tether is printing USDT without backing anymore how would this impact the crypto market? I expect another USD stablecoin would just take its place and life would go on. Crypto trading/hodling is just too irresistible at this point. The last _3 months_ saw $1Tn of new money poured into crypto from all sides. I would be curious to know what does HN genuinely think about this USDT controversy, if possible without the shilling and emotion?

garmaine 5y ago
.
- anonymoushn 5y ago
  How? If a USDT-denominated exchange holds a certain amount of USDT and a certain amount of other cryptocurrencies, a change in the dollar value of USDT won't make them unable to make customers whole.
ameister14 5y ago
Did you follow the archegos capital implosion? That's what happens on a smaller scale than tether. What you'll get is a price drop, a pretty significant one, because it will happen suddenly. There is no foundation for the current prices of cryptocurrency, so if people get the impression that its propped up by frauds it runs the risk of dropping precipitously. Also, I think you underestimate the follow-on effects of 20% of a market's daily trading volume pulled out of a market all at once.
- zilebune 5y ago

jonplackett 5y ago

It seems to me the debate is no long whether tether is a scam, it’s just if anyone cares it’s a scam.

TicklishTiger 5y ago

About 40% of all Dollars were created in 2020: https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren...

shkkmo 5y ago
That chart shows the federal reserve assets, not the total supply of dollars. It's a pretty interesting chart, but it doesn't support the statistic you quoted.
- zoshi 5y ago
  The chart for M1 (currency, demand deposits, and other liquid deposits) looks similar: https://fred.stlouisfed.org/series/M1 https://fred.stlouisfed.org/series/M1 That's about 30% of all US money supply created in 2020.
  - shkkmo 5y ago
    I'm sorry, I don't have enough information on what those statistics mean. I'm not sure what that chart measures, but it shows a 4x increase in early 2020 which leads me to think it isn't saying what you think it's saying. While I don't doubt it relates to how the Fed manages the money supply, it doesn't say what you want it to say. If you are going to sell this point, you need a source that undstands and can break down the subject matter to explain what these charts are measuring and how that relates to the supply of US currency.
- TicklishTiger 5y ago
  The Fed is the only source of Dollars. Banks only produce IOUs.