5 ms·

I'm continually surprised USDT doesn't unpeg. Going from "100% backed" by USD reserves as questionable as that was to being backed by a mix of crypto holdings (

by rtkwe 5y ago

I'm continually surprised USDT doesn't unpeg. Going from "100% backed" by USD reserves as questionable as that was to being backed by a mix of crypto holdings (who's price is heavily affected if USDT is pumping money into crypto) and commercial paper really didn't seem to have any affect on it's use. For all the winging about money printing and crypto not being printed USDT is seemingly a huge money printer forming a pretty central part of the crypto economy.

derac 4y ago
it just did lol
xvector 5y ago
Everyone knows USDT is a problem. The issue is that exchanges refuse to stop accepting it.
- 0des 5y ago
  I also fully believe Bitfinex is likely to be manipulating USDT. It is the only way it makes sense. But check this out, here's why you should not wish too hard on its failure: It is too big to fail because a lot of BTC would lose value over night, the entire plug would be pulled out of the industry due to the loss of confidence. Predatory and uninformed legislation would happen while the price and negotiating power is low, and in this time, that is when you really see the blood hit the floor with regard to scams, theft, crime, etc. Regardless of your position on USDT, you should pray this never happens. Edit: For the critics of cryptocurrencies responding below, allow me to make this response -- I didn't have anything to do with subprime mortgages, along with most of USA, however we all paid dearly for that mistake. As the comingling of cryptocurrency and traditional markets become increasingly intertwined, what makes you think that the ancillary effects of a crypto crash wouldn't effect you in some way?
  - tekstar 5y ago
    Sorry where's the downside? That all sounds pretty good, especially for the environment.
    - xvector 5y ago
      All of crypto barely uses more power (120 TWh) than a single hydroelectric dam produces (111 TWh.) The "bad for the environment" is a meaningless talking point used by people that are jealous they didn't "get in on it" early enough.
      - tptacek 5y ago
        Those numbers --- lower than numbers you can get from Google, but sure --- appear to say the same thing as "all of crypto uses barely more power than any but the top 28 energy-consuming countries in the world". Do let me know if I got the math wrong there!
        xvector 5y ago
        Now you know that most most countries barely use any power! A single dam could power them! This is why the "crypto uses more power than X country" is a meaningless talking point.
        tptacek 5y ago
        The list includes Sweden, Norway, Argentina, the Netherlands, the UAE, the Philippines, Finland, Belgium, Pakistan, Austria, the Czech Republic, Israel, Switzerland, and Singapore, among (obviously) many others. I don't think that statistic was the mic drop you thought it was. But sure, let's give them all 111TWh hydroelectric dams.
        gus_massa 5y ago
        Can you remove Argentina from the list? :) I'll copy an old comment by me, and the 2 parents comments for context. It was posted in https://news.ycombinator.com/item?id=28420667 https://news.ycombinator.com/item?id=28420667 (8 months ago) >>> So let's use the article's figure of 140 TWh of power used per year. Let's compare that to domestic energy usage by country https://yearbook.enerdata.net/electricity/electricity-domestic-consumption-data.html https://yearbook.enerdata.net/electricity/electricity-domest.... That's more than Argentina and about half of what the UK uses. >> From https://digiconomist.net/bitcoin-energy-consumption/ https://digiconomist.net/bitcoin-energy-consumption/ . >> Bitcoin would be the 27th most energy using country: ahead of Argentina (30), Sweden (29), and Ukraine (28); just below and about to overtake Malaysia (26), and below Egypt (25) and Poland (24). > A big chunk of our economy in Argentina is transforming sunlight into soybeans. So we should add it. Just imagine that we covered all the Pampa with solar panels and then use that energy to ... illuminate hydroponic soy. > From https://en.wikipedia.org/wiki/Agriculture_in_Argentina#Production_per_commodity https://en.wikipedia.org/wiki/Agriculture_in_Argentina#Produ... the cultivated area is 250.000km^2 . Let's assume 1000W/m^2 and a 10% of efficiency, 12 hours of sun per day, and 1/3 of the year of grow of the plants. Then I get 36.5TWh https://www.wolframalpha.com/input/?i=250.000km%5E2+*1000W%2Fm%5E2+*+10%25+*+12h+*+365%2F3+to+TWh https://www.wolframalpha.com/input/?i=250.000km%5E2+*1000W%2... (I had to guess a lot of things. I'd love to see a more accurate calculation.) > So with an additional energy of 36.5TWh, we jump from 132.7TWh to 169.2TWh that is more than the value of Poland 168.8TWh. (But other countries may want to add their solar->plants power too.)
  - codefreeordie 5y ago
    All of the crypto ponzi schemes going to zero and all the idiots who participated losing their shirts would really be a wonderfully great outcome. It's also inevitable eventually, all alternatives are just artificially prolonging the pain
    - worik 5y ago
      > all the idiots who participated losing their shirts would really be a wonderfully great outcome. Very harsh. I can see no ethical way that they can keep their shirts (unethical is sell to greater fool). I do not think this is a "...great outcome". Wonderful or otrherwise It is yet another repeat of the age old lesson: There is no magic.
      - rtkwe 5y ago
        I'm convinced that's what NFTs were partially invented and pushed to do. Hot new shiny thing to bring new money in to let the original crypto group cash out.
        deleted 5y ago
        [deleted]
        xvector 5y ago
        NFTs are a concept no different than Rai stones used by Micronesians for centuries, or any other property deeds style exchange. Hating on them is absurd - it's just another concept/financial construct.
        vkou 5y ago
        As a concept, they are more like me selling a photograph of the deed to my house. Thinking that they solved a problem that anyone has ever had is what's absurd.
        ryanobjc 5y ago
  - ShamelessC 5y ago
    Ah, "too big to fail"? Remind me, what about this whole cryptocurrency experiment is working the way its proponents claimed? > plug would be pulled out of the industry due to the loss of confidence. Sounds great! > Predatory and uninformed legislation would happen while the price and negotiating power is low, and in this time, that is when you really see the blood hit the floor with regard to scams, theft, crime, etc. I don't wish scams on anyone, but perhaps it's time we got this all over with, yeah? Seems like it's going to hurt more people in the long run.
  - deleted 5y ago
    [deleted]
  - solarkraft 5y ago
    > what makes you think that the ancillary effects of a crypto crash wouldn't effect you in some way? That it's not that intertwined yet. And such a crash would likely prevent a lot of such going forward, which is arguably very good news for the longer term.
  - gen220 5y ago
    The scenario you describe is how I justify my stance as long btc/eth, but holding neither. When USDT pops, it will leave a huge vacuum in behind, and cause a lot of harm to the latest wave of crypto adopters (2017-on). Like your analogy to subprime mortgages, this crisis will precipitate serious regulation that probably won't quite go far enough, which is the final stage of institutionalization cryptocurrency has been missing. From that crater, it can only improve in terms of mass adoption. I'll be a holder again in the year 1, post-USDT.
  - Scarblac 5y ago
    The crash is going to happen anyway, the longer it takes the more painful it will be.
- panarky 5y ago
  It's true, everyone does know about Tether's problems. Still waiting for the evangelists of unregulated free markets to explain why it doesn't trade at ninety-nine cents or less.
  - rtkwe 5y ago
    Best guess it doesn't really need a real executable peg since it provides such a convenient tax shelter to avoid realizing crypto gains. It's useful enough people are willing to ignore the issues and since it's backing isn't immediately examinable it gets to stay alive. On chain algorithmic pegs are vulnerable because their backing is immediately visible where Tether was able to just fake backing long enough to get deeply integrated into the crypto markets.
    - jimmydorry 5y ago
      In most developed nations, capital gains tax applies even against "like-for-like" trades. The swap between crypto types triggers a capital gain event and resets your cost basis. So people using USDT to move funds between exchanges without paying taxes on their gains are probably asking for trouble. USDT _IS_ a useful tool to facilitate quick movement of funds between exchanges without the delays and expense of the conventional financial system, though. I'm not an accountant, and I'm not your accountant. Not financial advice.
  - ryanobjc 5y ago
    Because people can, and do, redeem USDT -> USD via wires. As long as people can redeem, then there's no major concern.
csomar 5y ago
It used to unpeg frequently (though not as bad as this TerraUSD episode). The stability has increased and the yield has decreased; a lot (yearly yield was close to 30% at some points). My guess is that they figured out how to peg efficiently as they have maintained the peg through various brutal crypto dips. The market does seem to think so (hence the low yield).
- SilasX 5y ago
  Tether doesn't have a yield; did you mean a particular platform that takes deposits?
  - csomar 4y ago
    Tether has a yield in the same way USD cash has yield. You have to deposit into a platform and get exposed to an instrument to generate the yield.
    - SilasX 4y ago
      USD doesn’t have a yield either, and if I wanted to refer to the yield you’re describing here, I’d refer to the specific instrument that generates the yield (eg government bonds of a particular duration) rather than the yield on the invested asset itself. What instruments did you mean for USDT and USD?
      - TrapLord_Rhodo 4y ago
        check out defi llama for pools.
tptacek 5y ago
How long has UST managed to stay pegged to the dollar, despite being self-evidently unsound? The market can remain irrational indefinitely, &c &c.
- feanaro 5y ago
  If the market can remain irrational indefinitely, is it even being irrational anymore? Words should continue to have meaning.
  - deleted 5y ago
    [deleted]
  - karpierz 4y ago
    I think the parent is referring to the saying "the market can remain irrational longer than you can remain solvent". Meaning that the market can remain irrational for arbitrary periods of time, not infinite. It'll eventually converge, but it's a question of how long.
  - philosopher1234 4y ago
    Rationality is not defined by what the market thinks, so yes.
redisman 5y ago
USDT is a black box. They almost certainly just write whatever is needed to keep the peg on their “bookkeeping” each day
netheril96 4y ago
USDT will only unpeg if many people simultaneously try to convert USDT to dollars at Tether. Right now most people who want to convert USDT to USD just sell them to another person at an exchange. This game can last for a long time.

by rtkwe 5y ago

derac 4y ago

it just did lol

xvector 5y ago

Everyone knows USDT is a problem. The issue is that exchanges refuse to stop accepting it.

0des 5y ago
I also fully believe Bitfinex is likely to be manipulating USDT. It is the only way it makes sense. But check this out, here's why you should not wish too hard on its failure: It is too big to fail because a lot of BTC would lose value over night, the entire plug would be pulled out of the industry due to the loss of confidence. Predatory and uninformed legislation would happen while the price and negotiating power is low, and in this time, that is when you really see the blood hit the floor with regard to scams, theft, crime, etc. Regardless of your position on USDT, you should pray this never happens. Edit: For the critics of cryptocurrencies responding below, allow me to make this response -- I didn't have anything to do with subprime mortgages, along with most of USA, however we all paid dearly for that mistake. As the comingling of cryptocurrency and traditional markets become increasingly intertwined, what makes you think that the ancillary effects of a crypto crash wouldn't effect you in some way?
- tekstar 5y ago
  Sorry where's the downside? That all sounds pretty good, especially for the environment.
  - xvector 5y ago
    All of crypto barely uses more power (120 TWh) than a single hydroelectric dam produces (111 TWh.) The "bad for the environment" is a meaningless talking point used by people that are jealous they didn't "get in on it" early enough.
    - tptacek 5y ago
      Those numbers --- lower than numbers you can get from Google, but sure --- appear to say the same thing as "all of crypto uses barely more power than any but the top 28 energy-consuming countries in the world". Do let me know if I got the math wrong there!
      - xvector 5y ago
        Now you know that most most countries barely use any power! A single dam could power them! This is why the "crypto uses more power than X country" is a meaningless talking point.
        tptacek 5y ago
        The list includes Sweden, Norway, Argentina, the Netherlands, the UAE, the Philippines, Finland, Belgium, Pakistan, Austria, the Czech Republic, Israel, Switzerland, and Singapore, among (obviously) many others. I don't think that statistic was the mic drop you thought it was. But sure, let's give them all 111TWh hydroelectric dams.
        gus_massa 5y ago
        Can you remove Argentina from the list? :) I'll copy an old comment by me, and the 2 parents comments for context. It was posted in https://news.ycombinator.com/item?id=28420667 https://news.ycombinator.com/item?id=28420667 (8 months ago) >>> So let's use the article's figure of 140 TWh of power used per year. Let's compare that to domestic energy usage by country https://yearbook.enerdata.net/electricity/electricity-domestic-consumption-data.html https://yearbook.enerdata.net/electricity/electricity-domest.... That's more than Argentina and about half of what the UK uses. >> From https://digiconomist.net/bitcoin-energy-consumption/ https://digiconomist.net/bitcoin-energy-consumption/ . >> Bitcoin would be the 27th most energy using country: ahead of Argentina (30), Sweden (29), and Ukraine (28); just below and about to overtake Malaysia (26), and below Egypt (25) and Poland (24). > A big chunk of our economy in Argentina is transforming sunlight into soybeans. So we should add it. Just imagine that we covered all the Pampa with solar panels and then use that energy to ... illuminate hydroponic soy. > From https://en.wikipedia.org/wiki/Agriculture_in_Argentina#Production_per_commodity https://en.wikipedia.org/wiki/Agriculture_in_Argentina#Produ... the cultivated area is 250.000km^2 . Let's assume 1000W/m^2 and a 10% of efficiency, 12 hours of sun per day, and 1/3 of the year of grow of the plants. Then I get 36.5TWh https://www.wolframalpha.com/input/?i=250.000km%5E2+*1000W%2Fm%5E2+*+10%25+*+12h+*+365%2F3+to+TWh https://www.wolframalpha.com/input/?i=250.000km%5E2+*1000W%2... (I had to guess a lot of things. I'd love to see a more accurate calculation.) > So with an additional energy of 36.5TWh, we jump from 132.7TWh to 169.2TWh that is more than the value of Poland 168.8TWh. (But other countries may want to add their solar->plants power too.)
- codefreeordie 5y ago
  All of the crypto ponzi schemes going to zero and all the idiots who participated losing their shirts would really be a wonderfully great outcome. It's also inevitable eventually, all alternatives are just artificially prolonging the pain
  - worik 5y ago
    > all the idiots who participated losing their shirts would really be a wonderfully great outcome. Very harsh. I can see no ethical way that they can keep their shirts (unethical is sell to greater fool). I do not think this is a "...great outcome". Wonderful or otrherwise It is yet another repeat of the age old lesson: There is no magic.
    - rtkwe 5y ago
      I'm convinced that's what NFTs were partially invented and pushed to do. Hot new shiny thing to bring new money in to let the original crypto group cash out.
      - deleted 5y ago
        [deleted]
      - xvector 5y ago
        NFTs are a concept no different than Rai stones used by Micronesians for centuries, or any other property deeds style exchange. Hating on them is absurd - it's just another concept/financial construct.
        vkou 5y ago
        As a concept, they are more like me selling a photograph of the deed to my house. Thinking that they solved a problem that anyone has ever had is what's absurd.
        ryanobjc 5y ago
- ShamelessC 5y ago
  Ah, "too big to fail"? Remind me, what about this whole cryptocurrency experiment is working the way its proponents claimed? > plug would be pulled out of the industry due to the loss of confidence. Sounds great! > Predatory and uninformed legislation would happen while the price and negotiating power is low, and in this time, that is when you really see the blood hit the floor with regard to scams, theft, crime, etc. I don't wish scams on anyone, but perhaps it's time we got this all over with, yeah? Seems like it's going to hurt more people in the long run.
- deleted 5y ago
  [deleted]
- solarkraft 5y ago
  > what makes you think that the ancillary effects of a crypto crash wouldn't effect you in some way? That it's not that intertwined yet. And such a crash would likely prevent a lot of such going forward, which is arguably very good news for the longer term.
- gen220 5y ago
  The scenario you describe is how I justify my stance as long btc/eth, but holding neither. When USDT pops, it will leave a huge vacuum in behind, and cause a lot of harm to the latest wave of crypto adopters (2017-on). Like your analogy to subprime mortgages, this crisis will precipitate serious regulation that probably won't quite go far enough, which is the final stage of institutionalization cryptocurrency has been missing. From that crater, it can only improve in terms of mass adoption. I'll be a holder again in the year 1, post-USDT.
- Scarblac 5y ago
  The crash is going to happen anyway, the longer it takes the more painful it will be.
panarky 5y ago
It's true, everyone does know about Tether's problems. Still waiting for the evangelists of unregulated free markets to explain why it doesn't trade at ninety-nine cents or less.
- rtkwe 5y ago
  Best guess it doesn't really need a real executable peg since it provides such a convenient tax shelter to avoid realizing crypto gains. It's useful enough people are willing to ignore the issues and since it's backing isn't immediately examinable it gets to stay alive. On chain algorithmic pegs are vulnerable because their backing is immediately visible where Tether was able to just fake backing long enough to get deeply integrated into the crypto markets.
  - jimmydorry 5y ago
    In most developed nations, capital gains tax applies even against "like-for-like" trades. The swap between crypto types triggers a capital gain event and resets your cost basis. So people using USDT to move funds between exchanges without paying taxes on their gains are probably asking for trouble. USDT _IS_ a useful tool to facilitate quick movement of funds between exchanges without the delays and expense of the conventional financial system, though. I'm not an accountant, and I'm not your accountant. Not financial advice.
- ryanobjc 5y ago
  Because people can, and do, redeem USDT -> USD via wires. As long as people can redeem, then there's no major concern.

csomar 5y ago

It used to unpeg frequently (though not as bad as this TerraUSD episode). The stability has increased and the yield has decreased; a lot (yearly yield was close to 30% at some points). My guess is that they figured out how to peg efficiently as they have maintained the peg through various brutal crypto dips. The market does seem to think so (hence the low yield).

SilasX 5y ago
Tether doesn't have a yield; did you mean a particular platform that takes deposits?
- csomar 4y ago
  Tether has a yield in the same way USD cash has yield. You have to deposit into a platform and get exposed to an instrument to generate the yield.
  - SilasX 4y ago
    USD doesn’t have a yield either, and if I wanted to refer to the yield you’re describing here, I’d refer to the specific instrument that generates the yield (eg government bonds of a particular duration) rather than the yield on the invested asset itself. What instruments did you mean for USDT and USD?
    - TrapLord_Rhodo 4y ago
      check out defi llama for pools.

tptacek 5y ago

How long has UST managed to stay pegged to the dollar, despite being self-evidently unsound? The market can remain irrational indefinitely, &c &c.

feanaro 5y ago
If the market can remain irrational indefinitely, is it even being irrational anymore? Words should continue to have meaning.
- deleted 5y ago
  [deleted]
- karpierz 4y ago
  I think the parent is referring to the saying "the market can remain irrational longer than you can remain solvent". Meaning that the market can remain irrational for arbitrary periods of time, not infinite. It'll eventually converge, but it's a question of how long.
- philosopher1234 4y ago
  Rationality is not defined by what the market thinks, so yes.

redisman 5y ago

USDT is a black box. They almost certainly just write whatever is needed to keep the peg on their “bookkeeping” each day

netheril96 4y ago

USDT will only unpeg if many people simultaneously try to convert USDT to dollars at Tether. Right now most people who want to convert USDT to USD just sell them to another person at an exchange. This game can last for a long time.