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Wouldn't Tether in effect be a Ponzi scheme if the value of 1 Tether permanently drops below 1 USD at some point? The reasonable assumption here is that Tether
by marvin 5y ago
Wouldn't Tether in effect be a Ponzi scheme if the value of 1 Tether permanently drops below 1 USD at some point?
The reasonable assumption here is that Tether (the entity) does some sort of embezzling in the background, which means that their assets will at some point be so much smaller than their liabilities that there's no way to maintain the illusion that 1 Tether is worth 1 dollar.
Ergo money has to keep flowing into Tether to maintain its price. That's close enough to equivalent to the critical part of what I understand a Ponzi scheme to be.
- lottin 5y agoIt's probably some kind of fraud, but not a Ponzi. A Ponzi operates under the pretence that it's an investment scheme whereas tether does not. A tether is a token that isn't supposed to appreciate over time and as such can't be seen as an investment.
- Ekaros 5y agoOpposite would be needed. That is I buy 1 tether for one USD. And then later I can sell that same tether for more than 1 USD. And possibly re-invest it again by buying more tether... That would be a Ponzi.