Tether (USDT) price falling to $0.95 • Hacker News Board

Re: Tether (USDT) price falling to $0.95

#31

Post by patrickg_zill » Mon, Oct 15, 2018, 1:13 PM UTC

village-idiot wrote: post #27

creshal wrote: post #21

Earlier quoted context omitted.

The Fed is backed by the US Federal Government, which has quite some assets to cash in to pay off its obligations in the worst case. Tether has… nothing.

Also, you need USD. Even if every other economic transaction you make is in crypto, you have to pay your taxes in USD. This alone adds quite a bit of demand for fiat.

Yes, there are very few examples of fiat being issued without requiring taxes be paid in that same fiat, as a way to drive demand for the currency.

Re: Tether (USDT) price falling to $0.95

#32

Post by andrewla » Mon, Oct 15, 2018, 1:43 PM UTC

lewisflude wrote: post #2

Isn't this an easy opportunity for arbitrage? Assuming it goes back up to $1. I thought that was the whole point of fiat-backed crypto?

It is an arbitrage, but not risk-free arbitrage. The current price differential between USDT and USD can be explained two ways.

One is that there's an ~8% chance of tether being long-term without value. That seems to be the dominant interpretation among critics of Bitfinex and Tether.

The other is that a short-term liquidity crunch is causing investors to take a haircut in order to obtain liquidity in their desired currency.

Rumors abound, but except for one tangential announcement from Bitfinex [1], I haven't heard much that is definitive about the current state of fiat deposits/withdrawals on Bitfinex. Currently the price differentials themselves are the strongest signal.

[1] https://medium.com/bitfinex/fiat-deposit-update-october-15th...

Re: Tether (USDT) price falling to $0.95

#33

Post by deckar01 » Mon, Oct 15, 2018, 1:45 PM UTC

Tsubasachan wrote: post #29

I always found it amusing bitcoin needs to be backed by USD. Wasn't the whole BTC religion about how bad and unstable traditional currencies are? Meanwhile no central bank is trying to save Tether.

It's not about backing with value, it's about liquidity. Traders want to use USD assets on a market and be able to transfer them as a digital asset between exchanges with minimal 3rd party fees. Transferring USD through a bank account can be expensive.

Re: Tether (USDT) price falling to $0.95

#34

Post by zamadatix » Mon, Oct 15, 2018, 1:49 PM UTC

jpatokal wrote: post #19

I built this site in February this year in anticipation: http://www.untether.space/ The spread between Bitcoin priced in Tether and Bitcoin priced in USD has been holding steady at For the curious, source at https://github.com/jpatokal/untether and also submitted as a Show HN at https://news.ycombinator.com/item?id=18219034 .

$2,000,000,000+ worth issued without proof of backing? What value did Tether add that people were willing to deal with it as a middleman to dollars?

Side note: The graph could use some TLC. The colors are indistinguishable and there are no static historical charts on the page, just the graph since my visit.

Re: Tether (USDT) price falling to $0.95

#35

Post by londons_explore » Mon, Oct 15, 2018, 1:56 PM UTC

nwellnhof wrote: post #10

lewisflude wrote: post #2

Isn't this an easy opportunity for arbitrage? Assuming it goes back up to $1. I thought that was the whole point of fiat-backed crypto?

The fact the Tether who issued USDT for presumably something around $1 aren't buying it back themselves for an easy profit should tell you something.

I see these possibilities:

* The tether organisation doesn't have an effective way to buy back tethers. They might not have the processes/infrastructure in place.

* The tether organisation doesn't have the USD in liquid enough form to do said purchasing. For example, it might be in frozen bank accounts or offshore and take many days to transfer.

* The backing USD doesn't exist entirely.

Re: Tether (USDT) price falling to $0.95

#36

Post by londons_explore » Mon, Oct 15, 2018, 1:59 PM UTC

zamadatix wrote: post #34

jpatokal wrote: post #19

I built this site in February this year in anticipation: http://www.untether.space/ The spread between Bitcoin priced in Tether and Bitcoin priced in USD has been holding steady at For the curious, source at https://github.com/jpatokal/untether and also submitted as a Show HN at https://news.ycombinator.com/item?id=18219034 .

$2,000,000,000+ worth issued without proof of backing? What value did Tether add that people were willing to deal with it as a middleman to dollars? Side note: The graph could use some TLC. The colors are indistinguishable and there are no static historical charts on the page, just the graph since my visit.

We have no proof $2B were issued.

It's possible that $2M were issued, and the rest don't even exist (or rather they are still controlled by the tether organisation).

Re: Tether (USDT) price falling to $0.95

#37

Post by TylerE » Mon, Oct 15, 2018, 2:04 PM UTC

zamadatix wrote: post #34

jpatokal wrote: post #19

I built this site in February this year in anticipation: http://www.untether.space/ The spread between Bitcoin priced in Tether and Bitcoin priced in USD has been holding steady at For the curious, source at https://github.com/jpatokal/untether and also submitted as a Show HN at https://news.ycombinator.com/item?id=18219034 .

$2,000,000,000+ worth issued without proof of backing? What value did Tether add that people were willing to deal with it as a middleman to dollars? Side note: The graph could use some TLC. The colors are indistinguishable and there are no static historical charts on the page, just the graph since my visit.

That is could be used to avoid all those annoying banking laws (AML, KYC, etc).

Re: Tether (USDT) price falling to $0.95

#38

Post by JumpCrisscross » Mon, Oct 15, 2018, 2:12 PM UTC

apo wrote: post #28

It could have something to do with the arrival (soon to be a flood) of much-better financed and regulated stable coins such as the Gemini dollar: To date, there has been no trusted and regulated digital representation of the U.S. dollar that moves in an open, decentralized manner like cryptocurrencies. Enter the Gemini dollar — a stable value coin (often called a “stablecoin”) that is (i) issued by Gemini, a New York…

> regulated stable coins such as the Gemini dollar

I still don't see how they satisfy their anti-money laundering requirements.

You can't have a token which is (a) anonymously traded, (b) freely redeemable for hard currency, and (c) compliant. Even if you modify (b) to "redeemable with approved KYC paperwork for hard currency," you still have the problem that you sold a token for cash to one person, redeemed it for cash to another person, and have no clue what happened in the middle.

One could completely remove (b), i.e. have a non-redeemable currency. But now you're closer to the precedent set by Liberty Reserve [1], in that the people who most want anonymous electronic dollars over real electronic dollars are people laundering money.

[1] https://www.nytimes.com/2013/05/29/nyregion/liberty-reserve-...

Re: Tether (USDT) price falling to $0.95

#39

Post by himlion » Mon, Oct 15, 2018, 2:13 PM UTC

londons_explore wrote: post #36

zamadatix wrote: post #34

Earlier quoted context omitted.

$2,000,000,000+ worth issued without proof of backing? What value did Tether add that people were willing to deal with it as a middleman to dollars? Side note: The graph could use some TLC. The colors are indistinguishable and there are no static historical charts on the page, just the graph since my visit.

We have no proof $2B were issued. It's possible that $2M were issued, and the rest don't even exist (or rather they are still controlled by the tether organisation).

We don't have proof, but what would their incentive be to print them but not issue them?

Re: Tether (USDT) price falling to $0.95

#40

Post by snarf21 » Mon, Oct 15, 2018, 2:15 PM UTC

apo wrote: post #28

It could have something to do with the arrival (soon to be a flood) of much-better financed and regulated stable coins such as the Gemini dollar: To date, there has been no trusted and regulated digital representation of the U.S. dollar that moves in an open, decentralized manner like cryptocurrencies. Enter the Gemini dollar — a stable value coin (often called a “stablecoin”) that is (i) issued by Gemini, a New York…

It is not just Gemini, there have been three other new big "stablecoins" launched in the last month. USDC from Circle, CarbonUSD from Carbon, PAX from Paxos and lots of even smaller players entering the market.