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Not to mention that it's worth only a tiny fraction of bitcoin + all the other cryptos.
by lvs 5y ago
Not to mention that it's worth only a tiny fraction of bitcoin + all the other cryptos.
- Marazan 5y agoHow much trading volume does tether have compared to "bitcoin + all the other cryptos"? Answer: a lot, Tether is the unit of account. If something happens to it the crypto space explodes as the volume of real dollar trades in crypto is a fraction of Tether trades.
- lvs 5y agoThat would certainly be a novel notion of systemic risk. It's like arguing that the financial system would collapse if TSLA trading were halted tomorrow. There's no shortage of other liquidity channels between market participants, so the loss would be confined to the held value of the security itself and any of its derivatives. I'd argue that the systemic risk of my toy analogy is actually worse than Tether, as the derivatives tied to its debt and futures are almost certainly a huge multiple of its notional value. I would venture that isn't the case for Tether, but I suppose it's possible too.
- Marazan 5y agoThere.... there isn't other liquidity channels. Everyone trades in Tethers. Its like if instead of buying stocks for money everyone bought and sold stocks using Enron shares.
- mortehu 5y agoIt costs $1 to increase the market cap of a fiat pegged stable coin by $1, while changing the market cap of Bitcoin is a lot cheaper because there's no safe way for a market maker to provide substantial liquidity for it. At any time this dynamic can start working in the other direction, and the market cap of Bitcoin can fall below the net value converted to it.
- lvs 5y agoI don't really know what you're saying. It's not much less safe to provide liquidity to bitcoin than to do so for any of the trillions in securities priced vastly in excess of the book value of their underlying assets.
- deleted 5y ago[deleted]
- Clewza313 5y agoWell, no, it costs absolutely nothing to print off another billion Tethers. We only have the vaguest possible assurances that there's something behind each USDT, and they've already admitted it's not actual dollars.
- mortehu 5y agoI guess I should have said "fiat pegged and backed".
- randomhodler84 5y agoNot absolutely nothing — it costs eth gas to call mint().