151–160 of 359 posts
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> Bitcoins can only be created via mining Why do people think that it's impossible for exchanges to do fractional reserve with bitcoin?
Because you can't lend out a Bitcoin you don't have, unlike fiat currency.
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I'm not sure I follow.. There is no BTC-USD tether? USDT is tethered to USD.
There doesn't need to be an official BTC-USD tether, BTCUSD on bitfinex is exactly that in practice and in fact.
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The statement that "this is impossible with bitcoin" is false. While initially bitcoins are issued as proof of work, as soon as there is a somewhat liquid secondary market then bitcoin becomes a financial asset with a value determined by the market. That value is effectively completely indepdent of any "inherent value" and fully determined by supply and demand
> fully determined by supply and demand With bitcoin you cannot manipulate the supply, therefore you can't magically create $800M out of thin air.
If you cannot increase supply in response to a higher price driven by higher demand, prices will increase even more
See this Econ 101 chart [1]:
Y axis represents price, x axis represents quantity. The lines represent simplified supply and demand curves (Wikipedia can explain why they are shaped as they are)
Initial supply and demand is represented by supply "s" and demand "d". Their intersection gives us initial price "p1" and quantity produced "q1".
If demand increases from "d" to "d2", normally suppliers would produce more to meet the new demand. So the price would increase to "p2" and quantity increase to "q2". So even here you get a price increase
But with supply constrained assets like bitcoin, you can't increase quantity supplied to q2. So the only way the market can absorb new demand is by a further price increase. Basically more people want a good, but more can't be made, so sellers rationally realize they can charge more. In the chart, the new price would be the point where the dotted vertical line above q1 intersects with d2
I found this comment, by Richard Berger on SeekingAlpha, compelling: > STOP! and think about what this author has revealed. Even IF Tether is NOT running a fraud, the arbitrage positions that automatically exist between Bitcoin and any tether are real and do create incentive to create an arbitraged feedback loop whereby a pegged tether between Bitcoin - any_generic_tether - USD does exist and self feeds, driving up B…
I can't wrap my head around this. Who is silly enough to sell bitcoins for 'worthless' Tether?
I found this comment, by Richard Berger on SeekingAlpha, compelling: > STOP! and think about what this author has revealed. Even IF Tether is NOT running a fraud, the arbitrage positions that automatically exist between Bitcoin and any tether are real and do create incentive to create an arbitraged feedback loop whereby a pegged tether between Bitcoin - any_generic_tether - USD does exist and self feeds, driving up B…
I can't wrap my head around this. Who is silly enough to sell bitcoins for 'worthless' Tether?
Aside from the discussion on Tethers I am sure this is not going to stop cryptocurrency buffs from talking/selling another round of "stable" coins. The unfortunate thing is time and again same old story is presented about either: how the company releasing the coins will act as lender/buyer of last resort or how "markets" will prevent the peg from going out of whack. The former logic forgets about how it puts a lot of…
> how "markets" will prevent the peg from going out of whack. One only needs to read about Long-Term Capital Management to see how flawed this is.
2. Buy Bitcoins with Tethers and tell people they get real US Dollars.
3. Push up the Bitcoin price until the general public starts to invest, depositing real US Dollars.
4a. Sell your Bitcoins for real US Dollars.
4b. Generate real US Dollar revenue from fees and operating an unregulated asset exchange.
TL;DR: why is the team behind Tether not proving the reserves? There is only one logic reason for this.
I'm not sure but, isn't this how the real banks operate, too? For example let's take a legal, legit, Bank named X in a country. If all the account owners wanted to retrieve their money, at the same time: can that bank serve that demand? Because normally for every 1 dollar deposited inside, bank can give away 5 dollars worth of credits to other people. (the ratio changes in every country probably). So accusing a virtu…
It does mean that a short-term run (e.g. if all depositors request all of those 5 dollars back) can be a problem, but it's a problem of liquidity (you have enough assets to pay all of them back, but they aren't available right now), not one of missing assets. Tether, on the other hand, has not properly shown that they have enough assets to buy back 100% of tethers to USD at a 1-to-1 rate; we don't expect them to hold 800m dollars in large bags of cash, but we'd expect them (just like a "real physical currency bank") to show that they hold 800m of assets backing this.
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Calling bitcoin a bubble seems like the wrong word. There are basically two possible outcomes: total market cap zero, or in the trillions. How much you think bitcoin is worth depends on your guess (and it really is just a guess, nobody has any idea what is going to happen) about the relative likelihood of each.
From Wikipedia: "An economic bubble or asset bubble (sometimes also referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, a speculative mania, or a balloon) is trade in an asset at a price or price range that strongly exceeds the asset's intrinsic value." Seems like a reasonable description of bitcoin to me I have yet to see a well thought out, rational, specific description of the…
Bitcoin has pivoted away from being a currency. Bitcoin is now a store of value, like gold.