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Stocks aren’t pegged to the dollar, you’re comparing apples and wrenches. Tether is much more like a money market fund than an equity or bond. If your point is

Stocks aren’t pegged to the dollar, you’re comparing apples and wrenches. Tether is much more like a money market fund than an equity or bond. If your point is that there isn’t infinite liquidity at the current market price for an equity or bond, you’re correct, but it’s irrelevant since tether is nothing like an equity or bond.

mistrial9 4y ago
yes, the distinctions you make are relevant; my point is exactly that there is NOWHERE NEAR the liquidity in ordinary markets.. I was too quick to object and with insufficient distinction, I stand corrected
potatolicious 4y ago
+1 on all of the above, and to add: there isn't infinite liquidity on securities, and that's ok. And that's exactly the problem: Tether is pretending not be be an security, even though it transparently is. Heck, to generalize on this, this is kind of the ur-problem with crypto generally: a bunch of things pretending to be currencies but are actually securities. The whole subterfuge is intentional, to foist risky assets on people by lying about their nature, and to avoid the (hard fought and hard justified) regulations around said risky assets.
- YawningAngel 4y ago
  Can you explain why USDT is a security but the US Dollar is not? It seems like the only real difference is that one has a wealthier and more powerful issuer than the other (which, obviously, is enormously significant still)
  - nightski 4y ago
    USDT's value is pegged to $1. USD is not pegged to anything else really.
    - kmeisthax 4y ago
      It is almost a rule of banking that pegs are made to be broken. If you say that one of something is worth one of the other, you are promising that you have a bottomless supply of the currency on both sides of the peg. This almost never actually happens and whoever is running the peg will inevitably be caught with their pants down. Bankers specifically love breaking pegs and have the means to do so. If USDT was run by the Federal Reserve nobody would question the system; because then they'd have the capability to issue both the USDT token and the dollars backing it. They would be considered as fungible as dollars in the bank versus dollars in your hand.
      - deleted 4y ago
        [deleted]
      - chii 4y ago
        > If USDT was run by the Federal Reserve nobody would question the system that's true, but only because the US (and the Feds) have had a good history of managing the system well (enough at least). And if that's the case, USDT is basically USD. It's the same reason why the USD is a reserve currency in the world today. Tether is attempting to tap into that reserve currency trust (ostensibly, to generate profit for themselves).
  - selectodude 4y ago
    the US Dollar is a currency. USDT is a security backed by things that aren't US Dollars.
    - JumpCrisscross 4y ago
      > US Dollar is a currency. USDT is a security backed by things that aren't US Dollars Meh, plenty of currencies—from the Emirati dirham to the Hong Kong dollar—are pegged [1]. International investors would just shit bricks if any of them dared the lack of transparency Tether pulls on crypto users. [1] https://www.investopedia.com/articles/forex/061015/top-exchange-rates-pegged-us-dollar.asp https://www.investopedia.com/articles/forex/061015/top-excha...
      - selectodude 4y ago
        They’re not pegged to assets though and as such can’t lose value. Currencies can only go down vis-a-vis each other. When you buy an HKD you’re not buying a slice of a USD, you’re buying an HKD.
        JumpCrisscross 4y ago
        > When you buy an HKD you’re not buying a slice of a USD, you’re buying an HKD You're also buying a commitment from the Hong Kong Monetary Authority (HKMA) to convert between Hong Kong and U.S. dollars at fixed exchange rates [1]. That promise is backed by the HKMA's reserves [2]. Tether closely resembles a pegged currency, albeit a banana republic's. [1] https://www.hkma.gov.hk/eng/key-functions/money/linked-exchange-rate-system/how-does-the-lers-work/ https://www.hkma.gov.hk/eng/key-functions/money/linked-excha... [2] https://www.hkma.gov.hk/eng/news-and-media/press-releases/2022/09/20220907-4/ https://www.hkma.gov.hk/eng/news-and-media/press-releases/20...
        selectodude 4y ago
        Hong Kong's central bank prints their own currency. They defend the value of it by engaging in open market operations. If they fail, you can still pay your taxes in Hong Kong with it. Tether does not print their own currency. If USDT goes to zero, you have nothing. It's good nowhere.
  - lazide 4y ago
    For one, currencies are issued and backed by sovereign nations generally, and recognized as legal tender somewhere. USDT is not on either count, as far as I am aware. It might technically count as a ‘crypto ecosystem currency’ since it is often used to exchange value between different chains/coins/exchanges. But it is very difficult to convert to a recognized currency, so a lot of folks also get unknowingly stuck with it thinking they have dollars. There is a reason USDT is the ticker they pushed for, not TETH or whatever.
    - mrsteveman1 4y ago
      > But it is very difficult to convert to a recognized currency, so a lot of folks also get unknowingly stuck with it thinking they have dollars. When Voyager entered bankruptcy, quite a few people suddenly discovered that the USDC they held on the platform was not the same as USD, did not enjoy the same legal protections USD would have, and that much of it had been loaned out to 3 arrows capital and was not coming back. The distinction became even more significant when the bankruptcy judge agreed that the bank accounts that were holding actual USD customer deposits were not part of the bankruptcy estate and had to be released back to those customers.

mistrial9 4y ago

yes, the distinctions you make are relevant; my point is exactly that there is NOWHERE NEAR the liquidity in ordinary markets.. I was too quick to object and with insufficient distinction, I stand corrected

potatolicious 4y ago

+1 on all of the above, and to add: there isn't infinite liquidity on securities, and that's ok. And that's exactly the problem: Tether is pretending not be be an security, even though it transparently is. Heck, to generalize on this, this is kind of the ur-problem with crypto generally: a bunch of things pretending to be currencies but are actually securities. The whole subterfuge is intentional, to foist risky assets on people by lying about their nature, and to avoid the (hard fought and hard justified) regulations around said risky assets.

YawningAngel 4y ago
Can you explain why USDT is a security but the US Dollar is not? It seems like the only real difference is that one has a wealthier and more powerful issuer than the other (which, obviously, is enormously significant still)
- nightski 4y ago
  USDT's value is pegged to $1. USD is not pegged to anything else really.
  - kmeisthax 4y ago
    It is almost a rule of banking that pegs are made to be broken. If you say that one of something is worth one of the other, you are promising that you have a bottomless supply of the currency on both sides of the peg. This almost never actually happens and whoever is running the peg will inevitably be caught with their pants down. Bankers specifically love breaking pegs and have the means to do so. If USDT was run by the Federal Reserve nobody would question the system; because then they'd have the capability to issue both the USDT token and the dollars backing it. They would be considered as fungible as dollars in the bank versus dollars in your hand.
    - deleted 4y ago
      [deleted]
    - chii 4y ago
      > If USDT was run by the Federal Reserve nobody would question the system that's true, but only because the US (and the Feds) have had a good history of managing the system well (enough at least). And if that's the case, USDT is basically USD. It's the same reason why the USD is a reserve currency in the world today. Tether is attempting to tap into that reserve currency trust (ostensibly, to generate profit for themselves).
- selectodude 4y ago
  the US Dollar is a currency. USDT is a security backed by things that aren't US Dollars.
  - JumpCrisscross 4y ago
    > US Dollar is a currency. USDT is a security backed by things that aren't US Dollars Meh, plenty of currencies—from the Emirati dirham to the Hong Kong dollar—are pegged [1]. International investors would just shit bricks if any of them dared the lack of transparency Tether pulls on crypto users. [1] https://www.investopedia.com/articles/forex/061015/top-exchange-rates-pegged-us-dollar.asp https://www.investopedia.com/articles/forex/061015/top-excha...
    - selectodude 4y ago
      They’re not pegged to assets though and as such can’t lose value. Currencies can only go down vis-a-vis each other. When you buy an HKD you’re not buying a slice of a USD, you’re buying an HKD.
      - JumpCrisscross 4y ago
        > When you buy an HKD you’re not buying a slice of a USD, you’re buying an HKD You're also buying a commitment from the Hong Kong Monetary Authority (HKMA) to convert between Hong Kong and U.S. dollars at fixed exchange rates [1]. That promise is backed by the HKMA's reserves [2]. Tether closely resembles a pegged currency, albeit a banana republic's. [1] https://www.hkma.gov.hk/eng/key-functions/money/linked-exchange-rate-system/how-does-the-lers-work/ https://www.hkma.gov.hk/eng/key-functions/money/linked-excha... [2] https://www.hkma.gov.hk/eng/news-and-media/press-releases/2022/09/20220907-4/ https://www.hkma.gov.hk/eng/news-and-media/press-releases/20...
        selectodude 4y ago
        Hong Kong's central bank prints their own currency. They defend the value of it by engaging in open market operations. If they fail, you can still pay your taxes in Hong Kong with it. Tether does not print their own currency. If USDT goes to zero, you have nothing. It's good nowhere.
- lazide 4y ago
  For one, currencies are issued and backed by sovereign nations generally, and recognized as legal tender somewhere. USDT is not on either count, as far as I am aware. It might technically count as a ‘crypto ecosystem currency’ since it is often used to exchange value between different chains/coins/exchanges. But it is very difficult to convert to a recognized currency, so a lot of folks also get unknowingly stuck with it thinking they have dollars. There is a reason USDT is the ticker they pushed for, not TETH or whatever.
  - mrsteveman1 4y ago
    > But it is very difficult to convert to a recognized currency, so a lot of folks also get unknowingly stuck with it thinking they have dollars. When Voyager entered bankruptcy, quite a few people suddenly discovered that the USDC they held on the platform was not the same as USD, did not enjoy the same legal protections USD would have, and that much of it had been loaned out to 3 arrows capital and was not coming back. The distinction became even more significant when the bankruptcy judge agreed that the bank accounts that were holding actual USD customer deposits were not part of the bankruptcy estate and had to be released back to those customers.