13 ms·

Tether Discussion featuring Bennett Tomlin and George Noble

119 points by jbp 5y ago

Bombthecat 5y ago
Personally, i dont see any difference between any coin and and "real world" currency. I dont mean the power behind it and stuff. But crypto basically left the gold standard itself a long time ago!
- kgin 5y ago
  USD gets its value from the legal requirement that taxes are paid in USD. Anyone who lives or wants to do business in the United States has to have dollars. That sets a floor of demand that more demand can be built on. Cryptos often have limited supply but have no floor on demand. For USD to go to zero, the United States as we know it would have to collapse. Most cryptos could go to zero with no real world change aside from people finding a different asset to speculate on.
  - saurik 5y ago
    Crypto-currencies are selling you a service: linearizing database transactions. This is like arguing that Apple could arbitrarily go to zero because the world would find a different phone to use, and while that's true it seems to miss the point that Apple is unlikely to go to zero until after someone makes a better phone or makes phones obsolete. The world of decentralized database transactions--particularly the turing complete ones you get from systems like Ethereum--isn't some random speculative asset like artwork or baseball cards.
    - TomSwirly 5y ago
      > Crypto-currencies are selling you a service: linearizing database transactions. That service is worth zero dollars to me and 99.9% of the world. Also, the cryptocurrency doesn't sell this service, and doesn't make any money.
    - jtbayly 5y ago
      I know tons of people speculating in Ethereum. I know nobody using it as a database.
      - saurik 5y ago
        I know a ton of people who speak English and I know literally no one who speaks Swahili: that doesn't mean that no one speaks it :/.
        jtbayly 5y ago
        I never said it did. I never said nobody actually uses Ethereum. I pointed out that its value is actually largely based on speculation. You may claim that there is a floor because it has inherent value as a database. You'd be right. Remove all the speculation and the floor is very very low, though.
      - deleted 5y ago
        [deleted]
    - EdwardDiego 5y ago
      ...so why is it that the world of "decentralized database transactions" is being used near exclusively for speculative assets like the various cryotocoins and, err, NFTs containing alleged artwork? Also, what real world usage do you actually see for "decentralized database transactions"? Beyond massive speculation and pictures of apes?
      - saurik 5y ago
        Some people--me included--believe that centralized systems for basic things are bad because of their single points of failure, whether physical or merely administrative. If you believe that centralized databases have value, and you believe that decentralization has value, then decentralized databases sound useful. Honestly, most centralized databases are used for silly things you would disagree with also, and the ones that aren't are often used for financial services that you are going to claim are somehow not ok when decentralized but totally fine when centralized :/. FWIW, I've been using it as a fully distributed replacement for the Tor directory servers (which are run by 9 people as a form of charity, with no plan when I have talked to them for how to deal with people coming by with crowbars to threaten them) and then people pay for their bandwidth (allowing for both fair allocation of resources and well as incentivization of supply), which of course fundamentally requires a programmable decentralized currency (which is itself just a program running on the programmable decentralized database).
  - Bombthecat 5y ago
    I know! What i meant, was, that crypto was made because the gold baking was gone. (one of the reasons and anonymity etc) now, we have tether beeing printed out of thin air and no one gives a shit :)
  - koonsolo 5y ago
    > USD gets its value from the legal requirement that taxes are paid in USD How long will that last? Miami and El Salvador are already proving you wrong. > For USD to go to zero, the United States as we know it would have to collapse Not if your government and country switches to crypto before the fiat collapse.
    - javert 5y ago
      > How long will that last? Miami and El Salvador are already proving you wrong. No, they don't prove him wrong. You need to argue against the best possible version of your opponent's position. Otherwise it's just, as they say, words in the wind.
  - TomSwirly 5y ago
    > Cryptos often have limited supply There are 6500 cryptocurrencies today. Anyone would wanted to create a new one, could in an instant.
loeg 5y ago
For what it’s worth, this is from July. It predates the recent CFTC news.
- qeternity 5y ago
  Why does the CFTC news have any bearing? The settlement was for a period of time that predates the much larger parabolic issuance of the past 18 months.
speedybird 5y ago
I downloaded the mp3 to listen to this, but the audio is filled with weird squeaks, squawks, and short skips. I don't know if their microphone is broke, if this is some effects they added to be cute, or if their mp3 download is simply corrupted. Either way, it's intolerable. I couldn't listen to it for more than a minute.
- svcrunch 5y ago
  There must be a problem with the mp3. I'm listening online and there's no such issues.
- pigeonhole123 5y ago
  I’m not hearing anything like that.
- codetrotter 5y ago
  The server reports that the MP3 file that you get from the download link is 79950993 bytes long, but the connection is closed for me after 79944810 bytes each time I try to download it. Perhaps this is the reason? The download link differs from the link that the embedded player is using for the file. Try downloading the file that the embedded player uses instead. Here's a link to said file: https://www.grant-williams.com/podcast-player/33211/the-grant-williams-podcast-bennett-tomlin-george-noble.mp3 https://www.grant-williams.com/podcast-player/33211/the-gran...
  - speedybird 5y ago
    That link works and sounds fine, thank you.
  - ficklepickle 5y ago
    Interestingly the download errors after 79944810 bytes using http1.1, but 79928426 bytes using http2. Strange! Thanks, that embed link worked properly.
  - deleted 5y ago
    [deleted]
przeor 5y ago
Everyone shall start with FED investigation and it's whole ecosystem behind it, it's much bigger fraud. They shall start with Paret rule here :D
sschueller 5y ago
You could just remove the T. In all seriousness the way the US gov has been playing with the debt ceiling and the enormous amount of money being printed the USD also has some serious issues.
- qeternity 5y ago
  This stuff is so disingenuous from maxis. I get that you want someone to pump your bags. But the US Govt gets to print dollars. That’s how that works, for better or worse. Tether does not get to print dollars (which is what they are doing by claiming they are “fully backed”).
  - arcticbull 5y ago
    It’s an asinine take in at least three separate ways. First 1USDT should equal the value of 1USD, so any drop in value of the USD would also be a drop in USDT purchasing power. Second, 1USDT backed by less than 1USD in value is obviously worth less than 1USD no matter what happens to the USD. Third, the charter of the fed, created by congress, is to maintain a low fixed rate of inflation and maximal employment (along the Philips curve). They adjust the supply to meet this objective. Tethers goal is to pump the bags of early crypto entrants to simulate - and stimulate - liquidity to the benefit of the few.
    - leppr 5y ago
      > Second, 1USDT backed by less than 1USD in value is obviously worth less than 1USD no matter what happens to the USD. That's obviously not how it works. For instance, US banks have capital requirements of ~8%, but the dollars they issue aren't worth $0.08, they're worth a full dollar (as long as no bank run happens). The same mechanics hold for Tether, whether they're regulated or not. In fact, USDTs are often worth more than a real dollar because the demand for them trumps their risk discount.
      - qeternity 5y ago
        Here is a perfect problem with crypto: people understand just enough tech or economics to be dangerous, and not enough to truly understand the system. This is of course absolutely not how things work. The risk isn’t with the dollar holders in the banking scenario because a dollar isn’t backed - it doesn’t need to be backed. This is the essence of fiat currency. The risk is with depositors (creditors), and as you say they do not value their deposits at 8 cents on the dollar just because that’s what capital reserve ratios are. We have tons of regulation and insurance and centuries of mistakes that have led to the current system. But your argument conflates one core thing: assets vs liabilities. The dollars that banks lend are real dollars, and the people who receive those dollars don’t care what the bank’s financial health is. That’s because the dollars they receive in a loan are liabilities, whereas when people receive Tether, it’s an asset. Let’s explore… People don’t deposit dollars in banks, and receive a certificate of deposit and use that in lieu of dollars. This is what is happening with Tether. Tether doesn’t take USD deposits and turn around and issue USD loans, it takes USD deposits and issues USDT certificates of deposit, which the market trades at par with USD. This difference is crucial though. Banks are fundamentally limited in the number of loans they can make versus the amount of deposits they hold. So they might be overlevered, but borrowers don’t worry about the dollars they receive being fake. And if the bank collapses, who cares, I’m a debtor, not a creditor. Reserve ratios matter to creditors, and don’t impact the legitimacy of any loans of they’ve made. Tether on the other hand takes deposits and issues certificates of deposit that they call USDT and claim are redeemable for one USD. These then trade on the open market as fungible USD. The problem is that this makes USDT holders creditors, whereas in the bank example USD holders are debtors. So this means as a creditor the solvency of the issuing institution is of paramount importance. If Tether implodes, USDT are worthless, just like if a bank implodes, its certificates of deposit might be worthless (ignoring insurance). But in the bank scenario, the dollars that it loaned out aren’t worth any less.
cobookman 5y ago
Sometimes I wonder if this is how Michael Burry and others felt before the housing crash. Right before the housing crash, most the in-industry folks were fully aware it was unsustainable, but they felt it would continue long term. Same goes for tether, majority of those involved in crypto know what they are doing, and the pump-up effect it's had to crypto.
- whatanorigtht 5y ago
  Oh so brave! Another hackernews commenter who hates bitcoin and thinks the price is too high! You're going to get so many upvotes!
  - swarnie 5y ago
    I think its more that Tether, the coin which provides the most liquidity in the market is an obvious scam. I know too many people are too deeply involved now to accept it...
    - whatanorigtht 5y ago
      Sure thing. The rise in bitcoins price certainly has nothing to do with the actions of central bankers. Have fun staying poor. Never leave your hackernews echo chamber.
      - shlant 5y ago
        I'm all for pushing back a bit against the usual HN crypto hate-fest, but you are really going about it in the most insufferable way possible. Maybe leave the crypto twitter level discourse out of it.
        whatanorigtht 5y ago
        Oh, I used to bother trying. Then eventually you realize any wrong think simply gets down voted into oblivion, your posting throttled, and eventually shadowbanned. So now I basically enjoy just telling the community to gfy.
janandonly 5y ago
There are a few issues at play here: 1. A lot of newly 'minted' Tether's are being used to buy Bitcoin (so prop it up, the Bitcoin price rises). 2. Possibly as a next step, these now more valuable bitcoins are than sold for real money, and the owners of bitfinex/tether pocket this real earned money as profit. 3. It should be noted that although the total amount of tether is still rising, the total amount of all "stable coins" is rising a lot faster, so basically, outpacing the growth of tether: the market seems to be on to them, and puts more trust in other stable coins. Personally, I like Maker's DAO decentralised SAI stable coin a lot. But preferences vary. 4. Why is there any demand at all for any stable coin? Can't a person just send/receive real dollars/euros? Answer: No . There are a lot of unbanked people in the world, more than we in our western minds would dare to guess, I think. Look at El Salvador: in 6 weeks since officially adopting Bitcoin as a currency (next to the US dollar, not replacing it mind you) the number of people that now have "wallet" software running on their phone is already lager then the number of people who over the past 20 years were able to open a bank account.
- ahtihn 5y ago
  Regarding point 4, it has nothing to do with unbanked people. The demand for stable coins comes from exchanges that don't want to deal wih US financial regulations.
  - gitfan86 5y ago
    Exactly. If I want to borrow your comic books and lend them out to my friends for a fee, I can pay you a cut on the money I make lending them to my friends. I can't do the same thing with money because then I am a financial institution. So instead I use stable coin crypto because that isn't money.
- kevingadd 5y ago
  Having the software is nice, but can they actually use it to do any banking?
- mettamage 5y ago
  > SAI stable coin a lot. I think it's DAI now.
benreesman 5y ago
I know some seriously sophisticated folks who are not only trading USDT at par, but even long, which I have long found puzzling given that anyone who didn’t just fall off the turnip truck knows it’s not even remotely capitalized to par. My personal suspicion is that when a trivially distressed asset is valued at or above par by smart people that those people expect a bailout/recapitalization. (Sidebar: USD is special among “fiat” currencies at the moment because its backed by the world’s largest military. Having guys with guns show up if you refuse to treat something as valuable is a pretty compelling argument to treat that thing as valuable.)
- nradov 5y ago
  The US government hasn't used their military to force anyone to transact in dollars, or even threatened to do so. The dollar has value primarily because taxes inside the US are denominated in dollars. If you don't pay your taxes with dollars then eventually civilian law enforcement will show up and seize your assets.
  - benreesman 5y ago
    Ah absolutely, the much more tangible short-term example of “guys with guns” is (admittedly ever more militarized) domestic law enforcement. But the implied threat towards anyone who say, started dumping US sovereign debt, or transacting petroleum in EUR, or whatever is very real. Countries have been liberated for less.
    - RealityVoid 5y ago
      I admit it is mighty convenient for the US to have the dollar as the reserve currency, but really, you are stretching your point, people outside US not accepting US dollars don't have violent threats looming over them.
    - nradov 5y ago
      China dumped a bunch of US sovereign debt. They haven't been "liberated" yet. https://www.cnbc.com/2020/11/02/china-drops-us-treasurys-impact-on-us-deficit-and-coronavirus-stimulus.html https://www.cnbc.com/2020/11/02/china-drops-us-treasurys-imp... Russia has started transacting petroleum in EUR. They haven't been "liberated" yet. https://www.reuters.com/article/us-rosneft-contracts-euro-idUSKBN1X31JT https://www.reuters.com/article/us-rosneft-contracts-euro-id... Petroleum transaction only make up a small fraction of worldwide dollar use. It doesn't really matter. https://foreignpolicy.com/2009/10/07/debunking-the-dumping-the-dollar-conspiracy/ https://foreignpolicy.com/2009/10/07/debunking-the-dumping-t...
tcgv 5y ago
Something I was thinking about is that this year alone Tether received almost 50 billions of new US dollars for printing the same amount of their coin, reaching the staggering Market cap of 68B. Even if they started as a scam and were a few billions out of parity, 2021 gave them a lot of additional runway, allowing them to recompose their reative parity to the USD. For instance, they could be 80% backed at the start of the year, and after 2021 cash inflows so far they could have gone up to 93% backed by simply doing nothing.
- onlyrealcuzzo 5y ago
  This is awfully optimistic thinking. They could also be <50% backed at the start of the year and <50% backed now... No one really knows.
- wjohnsto 5y ago
  They could although it's more likely, given their own pie charts, they didn't receive any US dollars for printing their coin over the past 1-2 years and instead loaned (i.e. commercial paper) USDT out. These loans are also significant in that they put Tether in the top 10 commercial paper holders in the world, but not significant enough for others in the top 10 to know about them or do any business with them.
echopurity 5y ago
Crypto was once backed by Tether that was once backed by the dollar that was once backed by gold...
bob229 5y ago
Who cares. Cryptos are scam trash

119 points by jbp 5y ago

Personally, i dont see any difference between any coin and and "real world" currency. I dont mean the power behind it and stuff. But crypto basically left the gold standard itself a long time ago!

kgin 5y ago
USD gets its value from the legal requirement that taxes are paid in USD. Anyone who lives or wants to do business in the United States has to have dollars. That sets a floor of demand that more demand can be built on. Cryptos often have limited supply but have no floor on demand. For USD to go to zero, the United States as we know it would have to collapse. Most cryptos could go to zero with no real world change aside from people finding a different asset to speculate on.
- saurik 5y ago
  Crypto-currencies are selling you a service: linearizing database transactions. This is like arguing that Apple could arbitrarily go to zero because the world would find a different phone to use, and while that's true it seems to miss the point that Apple is unlikely to go to zero until after someone makes a better phone or makes phones obsolete. The world of decentralized database transactions--particularly the turing complete ones you get from systems like Ethereum--isn't some random speculative asset like artwork or baseball cards.
  - TomSwirly 5y ago
    > Crypto-currencies are selling you a service: linearizing database transactions. That service is worth zero dollars to me and 99.9% of the world. Also, the cryptocurrency doesn't sell this service, and doesn't make any money.
  - jtbayly 5y ago
    I know tons of people speculating in Ethereum. I know nobody using it as a database.
    - saurik 5y ago
      I know a ton of people who speak English and I know literally no one who speaks Swahili: that doesn't mean that no one speaks it :/.
      - jtbayly 5y ago
        I never said it did. I never said nobody actually uses Ethereum. I pointed out that its value is actually largely based on speculation. You may claim that there is a floor because it has inherent value as a database. You'd be right. Remove all the speculation and the floor is very very low, though.
    - deleted 5y ago
      [deleted]
  - EdwardDiego 5y ago
    ...so why is it that the world of "decentralized database transactions" is being used near exclusively for speculative assets like the various cryotocoins and, err, NFTs containing alleged artwork? Also, what real world usage do you actually see for "decentralized database transactions"? Beyond massive speculation and pictures of apes?
    - saurik 5y ago
      Some people--me included--believe that centralized systems for basic things are bad because of their single points of failure, whether physical or merely administrative. If you believe that centralized databases have value, and you believe that decentralization has value, then decentralized databases sound useful. Honestly, most centralized databases are used for silly things you would disagree with also, and the ones that aren't are often used for financial services that you are going to claim are somehow not ok when decentralized but totally fine when centralized :/. FWIW, I've been using it as a fully distributed replacement for the Tor directory servers (which are run by 9 people as a form of charity, with no plan when I have talked to them for how to deal with people coming by with crowbars to threaten them) and then people pay for their bandwidth (allowing for both fair allocation of resources and well as incentivization of supply), which of course fundamentally requires a programmable decentralized currency (which is itself just a program running on the programmable decentralized database).
- Bombthecat 5y ago
  I know! What i meant, was, that crypto was made because the gold baking was gone. (one of the reasons and anonymity etc) now, we have tether beeing printed out of thin air and no one gives a shit :)
- koonsolo 5y ago
  > USD gets its value from the legal requirement that taxes are paid in USD How long will that last? Miami and El Salvador are already proving you wrong. > For USD to go to zero, the United States as we know it would have to collapse Not if your government and country switches to crypto before the fiat collapse.
  - javert 5y ago
    > How long will that last? Miami and El Salvador are already proving you wrong. No, they don't prove him wrong. You need to argue against the best possible version of your opponent's position. Otherwise it's just, as they say, words in the wind.
- TomSwirly 5y ago
  > Cryptos often have limited supply There are 6500 cryptocurrencies today. Anyone would wanted to create a new one, could in an instant.

loeg 5y ago

For what it’s worth, this is from July. It predates the recent CFTC news.

qeternity 5y ago
Why does the CFTC news have any bearing? The settlement was for a period of time that predates the much larger parabolic issuance of the past 18 months.

speedybird 5y ago

I downloaded the mp3 to listen to this, but the audio is filled with weird squeaks, squawks, and short skips. I don't know if their microphone is broke, if this is some effects they added to be cute, or if their mp3 download is simply corrupted. Either way, it's intolerable. I couldn't listen to it for more than a minute.

svcrunch 5y ago
There must be a problem with the mp3. I'm listening online and there's no such issues.
pigeonhole123 5y ago
I’m not hearing anything like that.
codetrotter 5y ago
The server reports that the MP3 file that you get from the download link is 79950993 bytes long, but the connection is closed for me after 79944810 bytes each time I try to download it. Perhaps this is the reason? The download link differs from the link that the embedded player is using for the file. Try downloading the file that the embedded player uses instead. Here's a link to said file: https://www.grant-williams.com/podcast-player/33211/the-grant-williams-podcast-bennett-tomlin-george-noble.mp3 https://www.grant-williams.com/podcast-player/33211/the-gran...
- speedybird 5y ago
  That link works and sounds fine, thank you.
- ficklepickle 5y ago
  Interestingly the download errors after 79944810 bytes using http1.1, but 79928426 bytes using http2. Strange! Thanks, that embed link worked properly.
- deleted 5y ago
  [deleted]

przeor 5y ago

Everyone shall start with FED investigation and it's whole ecosystem behind it, it's much bigger fraud. They shall start with Paret rule here :D

sschueller 5y ago

You could just remove the T. In all seriousness the way the US gov has been playing with the debt ceiling and the enormous amount of money being printed the USD also has some serious issues.

qeternity 5y ago
This stuff is so disingenuous from maxis. I get that you want someone to pump your bags. But the US Govt gets to print dollars. That’s how that works, for better or worse. Tether does not get to print dollars (which is what they are doing by claiming they are “fully backed”).
- arcticbull 5y ago
  It’s an asinine take in at least three separate ways. First 1USDT should equal the value of 1USD, so any drop in value of the USD would also be a drop in USDT purchasing power. Second, 1USDT backed by less than 1USD in value is obviously worth less than 1USD no matter what happens to the USD. Third, the charter of the fed, created by congress, is to maintain a low fixed rate of inflation and maximal employment (along the Philips curve). They adjust the supply to meet this objective. Tethers goal is to pump the bags of early crypto entrants to simulate - and stimulate - liquidity to the benefit of the few.
  - leppr 5y ago
    > Second, 1USDT backed by less than 1USD in value is obviously worth less than 1USD no matter what happens to the USD. That's obviously not how it works. For instance, US banks have capital requirements of ~8%, but the dollars they issue aren't worth $0.08, they're worth a full dollar (as long as no bank run happens). The same mechanics hold for Tether, whether they're regulated or not. In fact, USDTs are often worth more than a real dollar because the demand for them trumps their risk discount.
    - qeternity 5y ago
      Here is a perfect problem with crypto: people understand just enough tech or economics to be dangerous, and not enough to truly understand the system. This is of course absolutely not how things work. The risk isn’t with the dollar holders in the banking scenario because a dollar isn’t backed - it doesn’t need to be backed. This is the essence of fiat currency. The risk is with depositors (creditors), and as you say they do not value their deposits at 8 cents on the dollar just because that’s what capital reserve ratios are. We have tons of regulation and insurance and centuries of mistakes that have led to the current system. But your argument conflates one core thing: assets vs liabilities. The dollars that banks lend are real dollars, and the people who receive those dollars don’t care what the bank’s financial health is. That’s because the dollars they receive in a loan are liabilities, whereas when people receive Tether, it’s an asset. Let’s explore… People don’t deposit dollars in banks, and receive a certificate of deposit and use that in lieu of dollars. This is what is happening with Tether. Tether doesn’t take USD deposits and turn around and issue USD loans, it takes USD deposits and issues USDT certificates of deposit, which the market trades at par with USD. This difference is crucial though. Banks are fundamentally limited in the number of loans they can make versus the amount of deposits they hold. So they might be overlevered, but borrowers don’t worry about the dollars they receive being fake. And if the bank collapses, who cares, I’m a debtor, not a creditor. Reserve ratios matter to creditors, and don’t impact the legitimacy of any loans of they’ve made. Tether on the other hand takes deposits and issues certificates of deposit that they call USDT and claim are redeemable for one USD. These then trade on the open market as fungible USD. The problem is that this makes USDT holders creditors, whereas in the bank example USD holders are debtors. So this means as a creditor the solvency of the issuing institution is of paramount importance. If Tether implodes, USDT are worthless, just like if a bank implodes, its certificates of deposit might be worthless (ignoring insurance). But in the bank scenario, the dollars that it loaned out aren’t worth any less.

cobookman 5y ago

Sometimes I wonder if this is how Michael Burry and others felt before the housing crash. Right before the housing crash, most the in-industry folks were fully aware it was unsustainable, but they felt it would continue long term. Same goes for tether, majority of those involved in crypto know what they are doing, and the pump-up effect it's had to crypto.

whatanorigtht 5y ago
Oh so brave! Another hackernews commenter who hates bitcoin and thinks the price is too high! You're going to get so many upvotes!
- swarnie 5y ago
  I think its more that Tether, the coin which provides the most liquidity in the market is an obvious scam. I know too many people are too deeply involved now to accept it...
  - whatanorigtht 5y ago
    Sure thing. The rise in bitcoins price certainly has nothing to do with the actions of central bankers. Have fun staying poor. Never leave your hackernews echo chamber.
    - shlant 5y ago
      I'm all for pushing back a bit against the usual HN crypto hate-fest, but you are really going about it in the most insufferable way possible. Maybe leave the crypto twitter level discourse out of it.
      - whatanorigtht 5y ago
        Oh, I used to bother trying. Then eventually you realize any wrong think simply gets down voted into oblivion, your posting throttled, and eventually shadowbanned. So now I basically enjoy just telling the community to gfy.

janandonly 5y ago

There are a few issues at play here: 1. A lot of newly 'minted' Tether's are being used to buy Bitcoin (so prop it up, the Bitcoin price rises). 2. Possibly as a next step, these now more valuable bitcoins are than sold for real money, and the owners of bitfinex/tether pocket this real earned money as profit. 3. It should be noted that although the total amount of tether is still rising, the total amount of all "stable coins" is rising a lot faster, so basically, outpacing the growth of tether: the market seems to be on to them, and puts more trust in other stable coins. Personally, I like Maker's DAO decentralised SAI stable coin a lot. But preferences vary. 4. Why is there any demand at all for any stable coin? Can't a person just send/receive real dollars/euros? Answer: No . There are a lot of unbanked people in the world, more than we in our western minds would dare to guess, I think. Look at El Salvador: in 6 weeks since officially adopting Bitcoin as a currency (next to the US dollar, not replacing it mind you) the number of people that now have "wallet" software running on their phone is already lager then the number of people who over the past 20 years were able to open a bank account.

ahtihn 5y ago
Regarding point 4, it has nothing to do with unbanked people. The demand for stable coins comes from exchanges that don't want to deal wih US financial regulations.
- gitfan86 5y ago
  Exactly. If I want to borrow your comic books and lend them out to my friends for a fee, I can pay you a cut on the money I make lending them to my friends. I can't do the same thing with money because then I am a financial institution. So instead I use stable coin crypto because that isn't money.
kevingadd 5y ago
Having the software is nice, but can they actually use it to do any banking?
mettamage 5y ago
> SAI stable coin a lot. I think it's DAI now.

benreesman 5y ago

I know some seriously sophisticated folks who are not only trading USDT at par, but even long, which I have long found puzzling given that anyone who didn’t just fall off the turnip truck knows it’s not even remotely capitalized to par. My personal suspicion is that when a trivially distressed asset is valued at or above par by smart people that those people expect a bailout/recapitalization. (Sidebar: USD is special among “fiat” currencies at the moment because its backed by the world’s largest military. Having guys with guns show up if you refuse to treat something as valuable is a pretty compelling argument to treat that thing as valuable.)

nradov 5y ago
The US government hasn't used their military to force anyone to transact in dollars, or even threatened to do so. The dollar has value primarily because taxes inside the US are denominated in dollars. If you don't pay your taxes with dollars then eventually civilian law enforcement will show up and seize your assets.
- benreesman 5y ago
  Ah absolutely, the much more tangible short-term example of “guys with guns” is (admittedly ever more militarized) domestic law enforcement. But the implied threat towards anyone who say, started dumping US sovereign debt, or transacting petroleum in EUR, or whatever is very real. Countries have been liberated for less.
  - RealityVoid 5y ago
    I admit it is mighty convenient for the US to have the dollar as the reserve currency, but really, you are stretching your point, people outside US not accepting US dollars don't have violent threats looming over them.
  - nradov 5y ago
    China dumped a bunch of US sovereign debt. They haven't been "liberated" yet. https://www.cnbc.com/2020/11/02/china-drops-us-treasurys-impact-on-us-deficit-and-coronavirus-stimulus.html https://www.cnbc.com/2020/11/02/china-drops-us-treasurys-imp... Russia has started transacting petroleum in EUR. They haven't been "liberated" yet. https://www.reuters.com/article/us-rosneft-contracts-euro-idUSKBN1X31JT https://www.reuters.com/article/us-rosneft-contracts-euro-id... Petroleum transaction only make up a small fraction of worldwide dollar use. It doesn't really matter. https://foreignpolicy.com/2009/10/07/debunking-the-dumping-the-dollar-conspiracy/ https://foreignpolicy.com/2009/10/07/debunking-the-dumping-t...

tcgv 5y ago

Something I was thinking about is that this year alone Tether received almost 50 billions of new US dollars for printing the same amount of their coin, reaching the staggering Market cap of 68B. Even if they started as a scam and were a few billions out of parity, 2021 gave them a lot of additional runway, allowing them to recompose their reative parity to the USD. For instance, they could be 80% backed at the start of the year, and after 2021 cash inflows so far they could have gone up to 93% backed by simply doing nothing.

onlyrealcuzzo 5y ago
This is awfully optimistic thinking. They could also be <50% backed at the start of the year and <50% backed now... No one really knows.
wjohnsto 5y ago
They could although it's more likely, given their own pie charts, they didn't receive any US dollars for printing their coin over the past 1-2 years and instead loaned (i.e. commercial paper) USDT out. These loans are also significant in that they put Tether in the top 10 commercial paper holders in the world, but not significant enough for others in the top 10 to know about them or do any business with them.

echopurity 5y ago

Crypto was once backed by Tether that was once backed by the dollar that was once backed by gold...

bob229 5y ago

Who cares. Cryptos are scam trash