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

nytimes.com

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

#131

Post by Nursie »

craigc wrote: post #72
ceejayoz wrote: post #53

Earlier quoted context omitted.

> Lack of transparency does not necessarily indicate fraud Fraudulently claiming "frequent professional audits" that don't exist is good evidence of fraud. So is having a big link "proof of funds" on the home page that links to https://tether.to/wp-content/uploads/2017/09/Final-Tether-Co... which says "not intended to be, and should not be, used or relied upon by [non-Tether parties]".

Clearly we do not agree so it is not worth continuing to argue. Honestly, I just want this whole thing resolved one way or the other. I have no personal ties to Tether, and do not care if they are backed 1:1 with USD. I agree with you they should have an audit done to prove definitively one way or the other that they are backed by USD to put this entire thing to rest. As it is now, it keeps coming back up every few m…

Do you not think that perhaps the media should keep coming back to the possibility of multi-billion dollar fraud like this?

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

#132

Post by Nursie »

Jtsummers wrote: post #65
Nursie wrote: post #43

Earlier quoted context omitted.

> 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.

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

It's right there on the front page, a claim that they have 1 to 1 backing.

This seems to me like a blatant lie, along with their claims to audit.

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

#133

Post by FireBeyond »

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/

Then they are doing a REALLY bad job at managing their presence, because "Transparency" is one of their hallmarks:

https://wallet.tether.to/transparency

... supposedly.

Those are very specific numbers to be touting without anything supporting them.

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

#134

Post by Bucephalus355 »

john_moscow wrote: post #122
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…

I'd say there's a simpler explanation. Bitcoin has a limited predictable supply, so its price is mostly a function of the demand. And demand correlates with expectations, that typically follow the hype cycle [0]. I'm not sure how much someone managed to single-handedly manipulate the price, but the plain old human psychology, FOMO and the positive feedback loop for media writing about bitcoin demand definitely played…

Whenever some kind of good has a truly limited supply, that can fuel the most massive of bubbles by making the “bubble” look rational at first. The bubble hides itself under the guise of being about “supply and demand”.

The one thing that leaps to mind is the Japanese real estate speculation in the 1980’s. Everyone claimed, very logically, that Japan is a mountainous island with very limited space, so real estate would be almost sure to go up in value. Ultimately, the market crashed, and hasn’t recovered even 25 years later.

Curiously, at the height of the housing crisis homes were about 5.5 times the median national income. In San Francisco right now (another place where supply looks limited by the water) homes there are 17.2 times the median national income.

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

#135

Post by BLanen »

gowld wrote: post #62
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.

A dollar is a dollar.

A fake dollar pretends to be a dollar.

Is it that hard to not to feign ignorance and not be pedantic when you CLEARLY know what it means.

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

#136

Post by joosters »

GuB-42 wrote: post #92
ceejayoz wrote: post #33

Earlier quoted context omitted.

> Creating billions of dollars’ worth of value with a ridiculous perpetual-motion fake-dollar-printing machine is a real innovation. That's silly. Ponzi-style schemes have been around since at least the late 1800s.

If anything, Bitcoin is closer to the even older Tulip-mania than to a Ponzi scheme. A Ponzi scheme is a specific kind of fraud based on the promise of an unreasonably high return on investment which is actually payed by late adopters. Bitcoin doesn't make promises and it doesn't have a cover story to hide the source of the money. It may be a bubble, but it is not a Ponzi scheme.

The South Sea bubble is by far a better comparison. It even had ICOs (sort of) and token trading!

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

#137

Post by FireBeyond »

craigc wrote: post #90
jandrese wrote: post #83

Earlier quoted context omitted.

The extraordinary claim that people pumped billions of real US dollars into an upstart exchange with no proper accounting.

Ahhhh. Okay that makes more sense. Although at the time they did have accounting and audits. The last audit was September 2017, I believe.

And into a bank that has no US dealings or holdings, because Wells Fargo dropped them, and there are challenges with them using a US banks.

A bank that, through 2017, raised no questions when they were supposedly depositing multiple hundred million dollars, _multiple_ times a week.

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

#138

Post by Animats »

FabHK wrote: post #129
Animats wrote: post #116

Earlier quoted context omitted.

How can it "become backed"? Anyone who buys Tether expects to get Tether tokens. If the issuers created Tether tokens from nothing, there's no way they can become backed. Where would the money come from? Tether isn't redeemable, anyway. You can't go to the Tether issuers and demand a dollar for your Tether token. Financial Times: Meanwhile, the supply of Tethers rapidly ballooned, from $50 million to $2.2 billion. Th…

> How can it "become backed"? 1. Create 1m Tether out of thin air (unbacked). 2. Use them to buy 1000 BTC (when the price was 1000$). 3. BTC Price goes up to 10,000$. 4. Sell 1000 BTC for $10m. Keep $9m, and put $1m into a bank account to "back the tether".

The big generation of Tether occurred around the top, as Bitcoin neared US$20,000. Now it's around $6,000. If that was their strategy, they lost big.

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

#139

Post by SilasX »

ethbro wrote: post #117
spiorf wrote: post #79

Earlier quoted context omitted.

This is the internet, and those weapons can't fire down here. Try, instead, to delete a two week old transaction from the bitcoin blockchain. You will find that even with military-sized funding, you can't. That's what is backing up bitcoin's value

At USD$6.5B for a 51% attack (scraped off a website)... ... that's a smidge over 1% of the US military budget.

Doesn't mean it's easy to get approval to spend that "smidge" on an attack.

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

#140

Post by FireBeyond »

craigc wrote: post #72
ceejayoz wrote: post #53

Earlier quoted context omitted.

> Lack of transparency does not necessarily indicate fraud Fraudulently claiming "frequent professional audits" that don't exist is good evidence of fraud. So is having a big link "proof of funds" on the home page that links to https://tether.to/wp-content/uploads/2017/09/Final-Tether-Co... which says "not intended to be, and should not be, used or relied upon by [non-Tether parties]".

Clearly we do not agree so it is not worth continuing to argue. Honestly, I just want this whole thing resolved one way or the other. I have no personal ties to Tether, and do not care if they are backed 1:1 with USD. I agree with you they should have an audit done to prove definitively one way or the other that they are backed by USD to put this entire thing to rest. As it is now, it keeps coming back up every few m…

Do you feel that the narrative about Theranos was getting old, too? Continued questions about fraud and deception?
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