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Title is misleading; it makes it sound like Tether management is withdrawing some promise that USDTs can be redeemed at par. That would be much bigger news than the actual story, that they are trading for less than par. Not that I’m recommending you touch tethers with a ten foot pole!
Title is misleading; it makes it sound like Tether management is withdrawing some promise that USDTs can be redeemed at par. That would be much bigger news than the actual story, that they are trading for less than par. Not that I’m recommending you touch tethers with a ten foot pole!
Title is misleading; it makes it sound like Tether management is withdrawing some promise that USDTs can be redeemed at par. That would be much bigger news than the actual story, that they are trading for less than par. Not that I’m recommending you touch tethers with a ten foot pole!
they can't withdraw any such promise because it never existed, right?
did the supply of Tether also just jump $600m? https://coinmarketcap.com/currencies/tether/
What is interesting, is it appears that CMC updating the total supply occurred simultaneously with the drop in value. Is CMC data impacting the market independent of the actual supply?
A good book to read for anyone interested in economics is called "The End of Alchemy: Money, Banking, and the Future of the Global Economy", by Mervyn King, who was head of the Bank of England for about 10 years and during the financial crises of 2007-8. In the book, he discusses "the alchemy of money" which he roughly defines as how money isn't necessarily backed by any tangible assets. A lot of what happens in the…
Earlier quoted context omitted.
they can't withdraw any such promise because it never existed, right?
Yeah. Their TOS says that they're under no obligation of giving you dollars in exchange for tethers. In fact, no one has ever redeemed a single tether and there is no process in place to actually do it. Why people believe that 1 USDT = 1 USD is beyond me.
I imagine it's because Tether has an effective PR team.
The usdt/usd pair on most markets it trades on is heavily manipulated with wash trading. It doesn’t take a big buy order for bitfinex to bounce the price back to $1. What you really need to watch is the widening spread in price between bitfinex and other exchanges which implies that people are buying crypto at inflated usdt prices because they don’t trust usdt any more. I think if either that continues or the price o…
It seems like there's about a $150-$200 difference between the USD/USDT exchanges at the moment. Note that CEX.io has one of the highest, and they are also currently unable to allow USD withdrawls "because of high demand backing up their financial partner." https://www.cryptocompare.com/coins/btc/markets/USD CEX.io (see middle paragraph for shady explanation) https://blog.cex.io/news/recent_updates-16999
I'm a USDT skeptic but a 2 cent deviation isn't much considering it has often deviated by more than that in the other direction. If it hits 90cents on the dollar I think things are serious.
There remains the possibility that Tether doesn't need to have the money in reserve (or not 100%, anyway). It can just conduct open-market operations to maintain parity: printing & selling Tether when USDT/USD is above parity, and buying & destroying Tether when it is below. This could even make for a very nice business model, as explained in this blog post:
https://kevinlawler.com/tether
Of course, the conclusion that Tether will stay solvent from profit motive does not concord with history: FDIC came around for a reason, and that reason was 30% of all banks started in the US ended in insolvency. Plus, there are obvious parallels with Black Wednesday:
https://en.wikipedia.org/wiki/Black_Wednesday
You can even short Tether on Kraken, although then you have to worry about counter-party risk through exchange insolvency.
I am reminded of this: https://en.wikipedia.org/wiki/Black_Wednesday George Soros broke the Bank of English's attempt to maintain a minimum exchange rate for the Pound against various other European currencies. It was this experience that taught me that you can not cost free fix the exchange rate between currencies unless you are using "magic". And USDT has always seemed magical to me. BTW: https://www.coindesk.com/t…
No, it's very easy to fix the exchange rate between currencies: make them actually be the same currency. Tether is supposed to be be 100% backed by USD on a 1:1 basis. If that's true, while it may temporarily go higher and lower, and should always return to normal as actual USD moves in and out of the system. The controversy about Tether is very simple: they haven't taken any steps to convince people that's actually…
"Like any not credible fixed exchange rate regime that is not backed by enough reserves, Tether/USDT collapses when they run out of true dollar reserves. And since Tether/USDT 1:1 peg to the US$ is the mother of all scams it will soon collapse taking Bitcoin down with it."