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All the people responding to you are missing the distinction too... They can create/destroy coins at will. They say that they only do this when customers receiv

by po 4y ago

All the people responding to you are missing the distinction too... They can create/destroy coins at will. They say that they only do this when customers receive/withdraw fiat but we all know that's not the case and they aren't truthful about it.

tamrix 4y ago
- stormbrew 4y ago
  No one's being told otherwise with banks though. The current backup plan for 19th-century-style fiat bank runs is central bank insurance and money printing, not a rather bold claim that the banks are holding on to tens of billion of dollars in cash and not doing anything with it.
  - arcticbull 4y ago
    > The current backup plan for 19th-century-style fiat bank runs is central bank insurance and money printing... It's the FDIC. The FDIC was created in the wake of the Great Depression to make sure bank runs stopped. And in the last ~100 years since it was created they've succeeded. [1] Banks pay into the fund, which is used to make depositors whole in the event of insolvency. If the fund is exhausted, the FDIC also has a line of credit with the Fed. They have $125B of assets give or take, and a $100B line of credit. That said, we haven't drawn on the fund yet, AFAIK. Even in 2008, when WaMu collapsed, the OTS took ownership of WaMu Bank and sold it to JPMorgan. [2] [1] https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corp... [2] https://en.wikipedia.org/wiki/Washington_Mutual https://en.wikipedia.org/wiki/Washington_Mutual
    - danielrpa 4y ago
      There's more than the FDIC. The government has shown over and over that it will bailout and/or nationalize financial institutions that could bring the entire system down (such as AIG). I'm not saying this system is perfect, but it's a LOT more robust and time tested than any cryptocurrency we have today.
    - stormbrew 4y ago
      I was being general because there are more countries in the world than the US, but this mechanism is the norm in most of the (US-aligned at least) world.
- arcticbull 4y ago
  This is honestly the most asinine remark. Tethers are supposed to be backed by $1 in assets. You're complaining that dollars are created out of nothing - they're not, of course, but even if they were: When Tether holds less than $1 of backing assets for each $1 of USDT in circulation it's worth strictly less than the $1 you're deriding. It is this gap we're talking about. So your comment isn't just wrong, it's completely irrelevant and a distraction from a real problem. Dollars enter circulation when they're borrowed. They leave circulation when the loan is repaid. The value of a dollar is derived from the obligation to repay the debt that created that dollar, and the legal system which enforces these contracts. Banks undergo rigorous audits so we know for a fact how this works and that this works. Banks are backed by the FDIC which in turn is backed by the Fed, you cannot have a bank run anymore. It's not possible. As such fractional reserve isn't a meaningful risk to depositors. Tether has no lender of last resort. $.80 of backing reserves for $1 of USDT doesn't mean each person gets $0.80. It means the first 80 people get $1, the last 20 people get $0. Tether has also never been audited.
  - MichaelBurge 4y ago
    > you cannot have a bank run anymore. It's not possible. As such fractional reserve isn't a meaningful risk to depositors. It's not possible for the "average person" to lose bank deposits. But if a cryptocurrency company is storing much more than FDIC limits in a single bank(because few banks are willing to deal with them), you could easily have a run on that bank. So even having $1 of USD backing reserves for $1 of USDT, there could still be withdrawal limits, halts, etc. because the underlying bank lent the deposits out. It needs to be paper cash in a safe to really protect against mass-withdrawals, and even then getting it "into the system" when people want it back could take a few days and lead to temporary halts.
  - hermitdev 4y ago
    > Banks are backed by the FDIC which in turn is backed by the Fed, you cannot have a bank run anymore. It's not possible. Yes, it is possible. FDIC doesn't insure all deposits. Typically you're capped at X thousands across all your accounts. I'm not sure what the current value of X is, 250? That said, a bank run is improbable. Also, be careful with cash holdings at investment institutions. Those are typically not FDIC ensured, especially if your cash is held in a money market account.
carrja99 4y ago
EXACTLY. What people miss the point about tether is that they can claim anything, at the end of the day there’s no transparency to what is really going on behind the curtain. And keep in mind US citizens cannot legally redeem tethers for USD either.
onlyrealcuzzo 4y ago
Did anyone do an analysis on which wallets had the most coins destroyed?

by po 4y ago

tamrix 4y ago

stormbrew 4y ago
No one's being told otherwise with banks though. The current backup plan for 19th-century-style fiat bank runs is central bank insurance and money printing, not a rather bold claim that the banks are holding on to tens of billion of dollars in cash and not doing anything with it.
- arcticbull 4y ago
  > The current backup plan for 19th-century-style fiat bank runs is central bank insurance and money printing... It's the FDIC. The FDIC was created in the wake of the Great Depression to make sure bank runs stopped. And in the last ~100 years since it was created they've succeeded. [1] Banks pay into the fund, which is used to make depositors whole in the event of insolvency. If the fund is exhausted, the FDIC also has a line of credit with the Fed. They have $125B of assets give or take, and a $100B line of credit. That said, we haven't drawn on the fund yet, AFAIK. Even in 2008, when WaMu collapsed, the OTS took ownership of WaMu Bank and sold it to JPMorgan. [2] [1] https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corp... [2] https://en.wikipedia.org/wiki/Washington_Mutual https://en.wikipedia.org/wiki/Washington_Mutual
  - danielrpa 4y ago
    There's more than the FDIC. The government has shown over and over that it will bailout and/or nationalize financial institutions that could bring the entire system down (such as AIG). I'm not saying this system is perfect, but it's a LOT more robust and time tested than any cryptocurrency we have today.
  - stormbrew 4y ago
    I was being general because there are more countries in the world than the US, but this mechanism is the norm in most of the (US-aligned at least) world.
arcticbull 4y ago
This is honestly the most asinine remark. Tethers are supposed to be backed by $1 in assets. You're complaining that dollars are created out of nothing - they're not, of course, but even if they were: When Tether holds less than $1 of backing assets for each $1 of USDT in circulation it's worth strictly less than the $1 you're deriding. It is this gap we're talking about. So your comment isn't just wrong, it's completely irrelevant and a distraction from a real problem. Dollars enter circulation when they're borrowed. They leave circulation when the loan is repaid. The value of a dollar is derived from the obligation to repay the debt that created that dollar, and the legal system which enforces these contracts. Banks undergo rigorous audits so we know for a fact how this works and that this works. Banks are backed by the FDIC which in turn is backed by the Fed, you cannot have a bank run anymore. It's not possible. As such fractional reserve isn't a meaningful risk to depositors. Tether has no lender of last resort. $.80 of backing reserves for $1 of USDT doesn't mean each person gets $0.80. It means the first 80 people get $1, the last 20 people get $0. Tether has also never been audited.
- MichaelBurge 4y ago
  > you cannot have a bank run anymore. It's not possible. As such fractional reserve isn't a meaningful risk to depositors. It's not possible for the "average person" to lose bank deposits. But if a cryptocurrency company is storing much more than FDIC limits in a single bank(because few banks are willing to deal with them), you could easily have a run on that bank. So even having $1 of USD backing reserves for $1 of USDT, there could still be withdrawal limits, halts, etc. because the underlying bank lent the deposits out. It needs to be paper cash in a safe to really protect against mass-withdrawals, and even then getting it "into the system" when people want it back could take a few days and lead to temporary halts.
- hermitdev 4y ago
  > Banks are backed by the FDIC which in turn is backed by the Fed, you cannot have a bank run anymore. It's not possible. Yes, it is possible. FDIC doesn't insure all deposits. Typically you're capped at X thousands across all your accounts. I'm not sure what the current value of X is, 250? That said, a bank run is improbable. Also, be careful with cash holdings at investment institutions. Those are typically not FDIC ensured, especially if your cash is held in a money market account.

carrja99 4y ago

EXACTLY. What people miss the point about tether is that they can claim anything, at the end of the day there’s no transparency to what is really going on behind the curtain. And keep in mind US citizens cannot legally redeem tethers for USD either.

onlyrealcuzzo 4y ago

Did anyone do an analysis on which wallets had the most coins destroyed?