Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say • Hacker News Board

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#61

Post by jandrese » Wed, Jun 13, 2018, 4:04 PM UTC

craigc wrote: post #49

ceejayoz wrote: post #42

Earlier quoted context omitted.

There's exceedingly strong evidence Tethers are not backed by USD - the Tether website claims "frequent professional audits", but they never completed their first one, were fired by their auditor, and cited a document explicitly stating it was "not intended to be, and should not be, used or relied upon" as proof of their reserves. It's a demonstrably fraudulent claim right there on their home page.

That is not strong evidence that they are not backed by USD. That is strong suspicion. > Lack of transparency does not necessarily indicate fraud https://blog.bitmex.com/tether/

Shouldn't it be incumbent on them to prove that they are backed by USD and not on me to disprove it? They are the ones making the extraordinary claim here.

Given the little we do know about the company the most reasonable assumption is that it is a slightly reworked Ponzi scheme.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#62

Post by gowld » Wed, Jun 13, 2018, 4:04 PM UTC

kgwgk wrote: post #28

Today Matt Levine talks about this paper in his daily column: https://www.bloomberg.com/view/articles/2018-06-13/judge-rul... "of these two explanations— 1) Bitcoin’s rapid and sustained rise is due to the fact that it satisfies a real economic need in an elegant way, and people have responded to that; or 2) Bitcoin’s rapid and sustained rise is due to a magical fountain of fake dollars that everyone just decided to…

What's the difference between a real dollar and a fake dollar?

All dollars are first-order fake.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#63

Post by hellbanner » Wed, Jun 13, 2018, 4:04 PM UTC

https://hackernoon.com/meet-spoofy-how-a-single-entity-domin...

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#64

Post by paulpauper » Wed, Jun 13, 2018, 4:05 PM UTC

cstejerean wrote: post #55

paulpauper wrote: post #51

Earlier quoted context omitted.

the second choice would be true if tether were fake. the evidence suggests it's backed by real money maybe there is a third option: 3. it was just a bubble pumped by people looking to get rich quick and who are now holding the bag.

Which evidence? Because around December when they were printing about a billion dollars worth of tether there was zero evidence it was backed by anything other than wishful thinking. Maybe that’s changed?

https://tether.to/wp-content/uploads/2017/09/Final-Tether-Co...

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#65

Post by Jtsummers » Wed, Jun 13, 2018, 4:05 PM UTC

Nursie wrote: post #43

deltateam wrote: post #36

Earlier quoted context omitted.

Right, its been the argument for the past year in the crypto space, and this is because of a lack of transparency from Bitfinex, which is the right move for Bitfinex. Many people are just assuming the worse, as they have no proof for the best case or the worst case. Every OTC desk I talk to always brags about how much demand there is for large buy orders, especially during the dips. If Bitfinex's Tether works as crea…

> IF current cryptocurrency owners are storing value in Tether so they they don't lose money, then more Tether's should be printed. Why ? Tether is supposed to be printed when (and only when) new dollars are given directly to them. If cryptocurrency owners want to store value in tethers, they must buy existing tethers with their cryptocurrency. That's how this is supposed to work. If more tethers are printed to fulfi…

From the Tether FAQ:

> The Tether Platform is fully reserved when the sum of all tethers in circulation is less than or equal to the balance of fiat currency held in our reserve.

That is to say, they offer no guarantee that 100% of USDT in circulation are backed by USD at any given moment.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#66

Post by fitchjo » Wed, Jun 13, 2018, 4:06 PM UTC

paulpauper wrote: post #51

kgwgk wrote: post #28

Today Matt Levine talks about this paper in his daily column: https://www.bloomberg.com/view/articles/2018-06-13/judge-rul... "of these two explanations— 1) Bitcoin’s rapid and sustained rise is due to the fact that it satisfies a real economic need in an elegant way, and people have responded to that; or 2) Bitcoin’s rapid and sustained rise is due to a magical fountain of fake dollars that everyone just decided to…

the second choice would be true if tether were fake. the evidence suggests it's backed by real money maybe there is a third option: 3. it was just a bubble pumped by people looking to get rich quick and who are now holding the bag.

What evidence have you seen that tether is backed by real money? I haven't seen "definitive" proof/evidence either way, but it would seem there are certainly strong suspicions that tether is not backed by real money (e.g., never having completed an audit and being fired by their auditing firm).

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#67

Post by bhouston » Wed, Jun 13, 2018, 4:06 PM UTC

cstejerean wrote: post #55

paulpauper wrote: post #51

Earlier quoted context omitted.

the second choice would be true if tether were fake. the evidence suggests it's backed by real money maybe there is a third option: 3. it was just a bubble pumped by people looking to get rich quick and who are now holding the bag.

Which evidence? Because around December when they were printing about a billion dollars worth of tether there was zero evidence it was backed by anything other than wishful thinking. Maybe that’s changed?

My theory is that it was initially not backed fully but after the fact it became backed. A billion or two dollars is not that much money to eventually get, especially if you also hold a lot of valuable BTC as a result of this manipulation.

Basically the unbacked tether allowed them to purchase BTC and with the great price increases that become worth way more than the unbacked tether allowing them to leverage that to actually get backing for the tether, either via selling BTC or merely promising it.

Thus I believe that tether is likely backed now.

I think it was an impressive scam, very ballsy.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#68

Post by Consultant32452 » Wed, Jun 13, 2018, 4:06 PM UTC

ceejayoz wrote: post #34

dustingetz wrote: post #26

Real central banks share an incentive to inflate asset prices just as much as Crypto exchanges do (altcoin exchanges take profits in crypto and thus are exposed). The parallels to central banking are astounding to me. Except in crypto this happened at internet speed instead of over 50 years. (I am not talking about money printing and interest rates, I'm talking about actual assets in bubbles like houses and stocks an…

Real central banks regularly raise interest rates to prevent over-inflation of asset prices.

I think banks have an equal and opposite position. Our debts are their assets. Inflation reduces the value of their assets.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#69

Post by yifanl » Wed, Jun 13, 2018, 4:08 PM UTC

craigc wrote: post #41

yifanl wrote: post #29

Earlier quoted context omitted.

The issue with using Tethers to pump up the price is that it implies there's billions of U.S. dollars backing up that Tether. If there isn't billions of USD to be found then... what? The USD pumping up the stock market is undeniably there, but if the Tether pumping up BTC isn't real (real being defined by the 1 USDT = 1 USD), then the price is essentially being pumped up by nothing.

But the article and report do not prove that Tethers are not backed by USD. In fact, it constantly says, “If Tether is not fully-backed by dollars”. All it definitively claims is that Tethers were used to buy Bitcoin when the Bitcoin price fell last year.

Of course they don't, the only reasonable way to prove such a claim would be to make a full audit of Tether. Which as of the moment is out of the cards due to lack of a willing auditor.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#70

Post by gowld » Wed, Jun 13, 2018, 4:09 PM UTC

ceejayoz wrote: post #11

paulgb wrote: post #8

What I don't get about the theory that Tether was used to intentionally manipulate markets, is that if you have a money-printing machine, you don't need to manipulate markets as a business model. You can just print money, that's the business model. Of course it's possible that that influx of capital will move a thin market. But Occam's razor seems to imply that that's a side effect rather than the intent.

> You can just print money, that's the business model. That is not Tether's stated business model. To issue 1 USDT, Tether is supposed to take in 1 USD from someone, and hold it safely in an account. Their stated business model is taking a 10 basis point or $20 fee (whichever one is higher) when someone buys USDT with USD. https://tether.to/fees/ The likely fraudulent business model would be printing USDT that aren't…

> Done right, they might even make enough money with such fraudulent trading to eventually have the cash reserves they claim to have.

This is the long-term history of sucessful organized crime: Obtain $X illegally, use that as seed investment for a legitimate business that generates $X legally, and then (if necessary) repay the original $X. Casino, Waste hauling business, and governments are often owned by organized crime families.