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Here's a question for tether "investors": why are you investing in something whose stated goal is to maintain a peg to the USD instead of, you know, just holdin

by jmyeet 5y ago

Here's a question for tether "investors": why are you investing in something whose stated goal is to maintain a peg to the USD instead of, you know, just holding money in US dollars? You're adding a bunch of risk for literally no upside. The only thing you gain is to to trade that on the blockchain, which is really a response to the oracle problem. So you've greatly increased your risk with no upside to slightly increase your utility. That doesn't seem like a good deal.

dmichulke 5y ago
As a US citizen try to send dollars to a Hong Kong or Singapore registered exchange. I think the "investing" in tether is really only the best match to "Let me see, where can I park my money in the least volatile way on this crypto exchange". EDIT: Interestingly, if tether breaks, then USDC is the last man standing and will have to work hard to maintain the peg. Under such circumstances it's quite possible that BTC is the next best "stable" coin.
- ineedasername 5y ago
  If USDC is truly backed 100% as stated then it shouldn't be a problem. In fact it might help them gain market share if coins with less backing de-pegged. Though I guess it could also lead to a general loss of faith in stable coins and folks as a whole would shy away from them. Either way, most stable coins are built on some form of trust, and I'm much more inclined to trust Coinbase than most others. (Disclaimer: I have no dog in this hunt, I don't own any crypto whatsoever.)
- whimsicalism 5y ago
  Dai? Why does everyone always forget Dai? Unlike Tether and USDC, I can actually verify that Dai is overcollateralized.
fooyc 5y ago
My understanding is that people don't invest in stable coins (like you don't invest in USD when you have USD on your brokerage account). Stable coins can be exchanged against other crypto currencies on chain. So if you are willing to trade crypto currencies, stable coins are more practical than USD. There are also tax implications: Depending on where you live, crypto-to-crypto profits are not taxable. You will be taxed if you sell crypto currencies for USD, but not if you sell crypto currencies for a stable coin.
- criddell 5y ago
  > You will be taxed if you sell crypto currencies for USD, but not if you sell crypto currencies for a stable coin. Does that also mean if a stable coin fails you can't write off losses?
  - fooyc 5y ago
    If you sell stable coins for USD and make a loss, you can write it off.
    - unityByFreedom 5y ago
      Oh neat, an asset that can only keep or lose value.
- whimsicalism 5y ago
  > There are also tax implications: Depending on where you live, crypto-to-crypto profits are not taxable. You will be taxed if you sell crypto currencies for USD, but not if you sell crypto currencies for a stable coin. At least in the US, this is not true. e: Not sure why I'm downvoted - crypto to crypto conversions are taxable in the US.
Alex3917 5y ago
> You're adding a bunch of risk for literally no upside. You mine a Bitcoin that 'should' be worth 5k USD, but is instead selling 60k USDT. So instead of selling that Bitcoin for 5k, you instead sell ~8% of your Bitcoin for 5k USDT, pay your expenses, and keep the other 92% of the Bitcoin you mined.
- ComputerGuru 5y ago
  How is that in any way not a scheme? Barring endless minting, market efficiency would guarantee either unlimited funds or the collapse of the currency.
miked85 5y ago
There aren't Tether investors, it's just used in exchanges. It wouldn't make much sense to "invest" in an asset which has the primary goal of never changing price.
SilasX 5y ago
>The only thing you gain is to to trade that on the blockchain, Well, yes? Isn't that enough to explain it? Normal US electronic dollars can't interface with Blockchain smartcontracts. So if you wanted to invest in e.g. a vault or liquidity pool, you would need to turn it into a stablecoin first.

by jmyeet 5y ago

dmichulke 5y ago

As a US citizen try to send dollars to a Hong Kong or Singapore registered exchange. I think the "investing" in tether is really only the best match to "Let me see, where can I park my money in the least volatile way on this crypto exchange". EDIT: Interestingly, if tether breaks, then USDC is the last man standing and will have to work hard to maintain the peg. Under such circumstances it's quite possible that BTC is the next best "stable" coin.

ineedasername 5y ago
If USDC is truly backed 100% as stated then it shouldn't be a problem. In fact it might help them gain market share if coins with less backing de-pegged. Though I guess it could also lead to a general loss of faith in stable coins and folks as a whole would shy away from them. Either way, most stable coins are built on some form of trust, and I'm much more inclined to trust Coinbase than most others. (Disclaimer: I have no dog in this hunt, I don't own any crypto whatsoever.)
whimsicalism 5y ago
Dai? Why does everyone always forget Dai? Unlike Tether and USDC, I can actually verify that Dai is overcollateralized.

fooyc 5y ago

My understanding is that people don't invest in stable coins (like you don't invest in USD when you have USD on your brokerage account). Stable coins can be exchanged against other crypto currencies on chain. So if you are willing to trade crypto currencies, stable coins are more practical than USD. There are also tax implications: Depending on where you live, crypto-to-crypto profits are not taxable. You will be taxed if you sell crypto currencies for USD, but not if you sell crypto currencies for a stable coin.

criddell 5y ago
> You will be taxed if you sell crypto currencies for USD, but not if you sell crypto currencies for a stable coin. Does that also mean if a stable coin fails you can't write off losses?
- fooyc 5y ago
  If you sell stable coins for USD and make a loss, you can write it off.
  - unityByFreedom 5y ago
    Oh neat, an asset that can only keep or lose value.
whimsicalism 5y ago
> There are also tax implications: Depending on where you live, crypto-to-crypto profits are not taxable. You will be taxed if you sell crypto currencies for USD, but not if you sell crypto currencies for a stable coin. At least in the US, this is not true. e: Not sure why I'm downvoted - crypto to crypto conversions are taxable in the US.

Alex3917 5y ago

> You're adding a bunch of risk for literally no upside. You mine a Bitcoin that 'should' be worth 5k USD, but is instead selling 60k USDT. So instead of selling that Bitcoin for 5k, you instead sell ~8% of your Bitcoin for 5k USDT, pay your expenses, and keep the other 92% of the Bitcoin you mined.

ComputerGuru 5y ago
How is that in any way not a scheme? Barring endless minting, market efficiency would guarantee either unlimited funds or the collapse of the currency.

miked85 5y ago

There aren't Tether investors, it's just used in exchanges. It wouldn't make much sense to "invest" in an asset which has the primary goal of never changing price.

SilasX 5y ago

>The only thing you gain is to to trade that on the blockchain, Well, yes? Isn't that enough to explain it? Normal US electronic dollars can't interface with Blockchain smartcontracts. So if you wanted to invest in e.g. a vault or liquidity pool, you would need to turn it into a stablecoin first.