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Crypto Market Roiled by New Allegations Against Tether, Bitfinex

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Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#111

Post by abakker »

nostrademons wrote: post #65
Animats wrote: post #17

So why hasn't the bottom fallen out of Tether yet?

Tether functions as sort of the reserve currency of crypto. Many exchanges don't even offer fiat money or banking connections - to use them, you have to send Bitcoin in from another exchange or a personal wallet, then you can convert it into Tether or other altcoins. People who are "getting out of crypto" by selling Bitcoins because they think the price is gonna drop oftentimes are actually buying Tethers. When 80% o…

>The US dollar hasn't been backed by anything since 1971 and is still ticking strong.

I think you might be overstating. The US dollar is not backed by an asset because it is an asset. At this point, the dollar is backed by the government, the government's authority, its military power, and the future value of its debt. That is not gold, but it is not nothing either.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#112

Post by jeremyjh »

gruez wrote: post #97
rsynnott wrote: post #80

Earlier quoted context omitted.

You may remember the implosion of mtgox, and people buying mtgox ‘dollars’ at a discount. There’s always a greater fool, apparently.

Wait, what's so foolish about buying debts for a discount? There's an entire industry (collections) devoted to that. Sure, that time they lost, but hindsight is 20/20.

That is right, it is an industry. It has established risk models. It has norms and remedies. Most importantly, it has the triumvirate of debt worthiness (aka credit bureaus) at it's beck and call.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#113

Post by danaos »

arcticfox wrote: post #93

I wonder if this is somehow related, 550 BTC (~$3M USD) connected to 2016 Bitfinex hack were moved today: https://www.reddit.com/r/Bitcoin/comments/bha10i/bitcoins_fr...

This is only a small fraction of the 120k bitcoins stolen at the time though. It may be a coincidence.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#114

Post by hendzen »

ronsor wrote: post #30

Cryptocurrency exchanges seem to be full of fraud and deception.

Speaking as someone who was deeply interested in bitcoin in ~2013, cryptocurrency today is a wretched hive of scum and villainy. When someone tells me today that they are working on something related to crypto I make a mental note to never work with them or take anything they do seriously.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#115

Post by abakker »

Obi_Juan_Kenobi wrote: post #108
abakker wrote: post #104

Earlier quoted context omitted.

There is no auditing whether he sold all his keys in the physical world. They may never have "transacted" on the blockchain, but that does not mean he never just gave away the ability to transact them physically. He may also have taken out a loan from a traditional financial institution and used them as collateral. There is a very real possibility that they are in fact owned by someone else now, who has made the same…

> There is no auditing whether he sold all his keys in the physical world. Are you trying to claim that someone would buy Satoshi's coins without moving them to a wallet they control? In this scenario, the person would have 'purchased' the coins with precisely zero assurance that Satoshi wouldn't just move them to a new address at any point, as he/she/they still have the private keys.

Someone could have the whole wallet...

As I said, it is impossible to verify that that isn't the case. He could have taken a loan with the whole wallet as collateral. That isn't the same as claiming that Satoshi did that, but it's not like the audibility of the blockchain spreads all the way to the real world. There's really no saying what Satoshi has done, and the anonymity means there's no way to find out.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#116

Post by nostrademons »

abakker wrote: post #111
nostrademons wrote: post #65

Earlier quoted context omitted.

Tether functions as sort of the reserve currency of crypto. Many exchanges don't even offer fiat money or banking connections - to use them, you have to send Bitcoin in from another exchange or a personal wallet, then you can convert it into Tether or other altcoins. People who are "getting out of crypto" by selling Bitcoins because they think the price is gonna drop oftentimes are actually buying Tethers. When 80% o…

>The US dollar hasn't been backed by anything since 1971 and is still ticking strong. I think you might be overstating. The US dollar is not backed by an asset because it is an asset . At this point, the dollar is backed by the government, the government's authority, its military power, and the future value of its debt. That is not gold, but it is not nothing either.

By the same token, cryptocurrencies are backed by the computing networks underlying them, the potential future usage of these computing networks, and by your ability to buy guns, drugs, and hacks with them. This is also not gold (although you can buy gold-backed cryptocurrency: see Digix), but not nothing either. That's why cryptocurrency evangelists harp on adoption and new use-cases: the value of any currency is primarily set by what you can spend it on. Right now you can spend Bitcoin on a lot fewer things than US Dollars, but your personal profit potential from holding a currency derives from the rate of increase in adoption, not its current level, and Bitcoin has a lot of room to grow while the dollar has virtually none.

Tether intrinsically has none of these, but because of its adoption by many exchanges, it's convertible into other currencies that have more intrinsic value. So as long as it remains convertible, it will continue to have value.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#117

Post by lamontcg »

WrtCdEvrydy wrote: post #103
therein wrote: post #76

Earlier quoted context omitted.

> It’s possible that Satoshi himself will try to liquidate his stake at some point, crashing BTC itself and make off with a cool billion. Who knows. That might have been the plan all along. Not quite possible with the auditing capabilities Bitcoin provides. The moment any amount from those accounts is moved, Bitcoin would probably tank.

I wonder what the maximum leverage you could short with if you had access to those coins... Break the private key, do a 30x leverage short and move the coins!

It is that last bit where it gets sticky.

If you tank the market and create systemic insolvency then you might hold $1B of short contracts at an exchange where the operators have packed up and fled to anonymous sandy beaches, and for all your cleverness those contracts and $10 might buy you lunch tomorrow.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#118

Post by themagician »

therein wrote: post #76
themagician wrote: post #71

Earlier quoted context omitted.

The lesson will never be learned. The Ponzi scheme is as old as money itself. It’s never gone away. The one thing that crypto currency truly has revolutionized is the Ponzi scheme. You can do it any number of ways, add any number of twists, and do it over and over again. With crypto you don’t even have to be subtle. When the pot gets big enough you just outright steal it. It’s possible that Satoshi himself will try t…

> It’s possible that Satoshi himself will try to liquidate his stake at some point, crashing BTC itself and make off with a cool billion. Who knows. That might have been the plan all along. Not quite possible with the auditing capabilities Bitcoin provides. The moment any amount from those accounts is moved, Bitcoin would probably tank.

It would tank, but he still may be able to do it. Even if the price plummeted to 1/10th its current value it would still be a fortune.

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#119

Post by Scoundreller »

therein wrote: post #76
themagician wrote: post #71

Earlier quoted context omitted.

The lesson will never be learned. The Ponzi scheme is as old as money itself. It’s never gone away. The one thing that crypto currency truly has revolutionized is the Ponzi scheme. You can do it any number of ways, add any number of twists, and do it over and over again. With crypto you don’t even have to be subtle. When the pot gets big enough you just outright steal it. It’s possible that Satoshi himself will try t…

> It’s possible that Satoshi himself will try to liquidate his stake at some point, crashing BTC itself and make off with a cool billion. Who knows. That might have been the plan all along. Not quite possible with the auditing capabilities Bitcoin provides. The moment any amount from those accounts is moved, Bitcoin would probably tank.

Could this work? Just run an exchange and become long cash and short bitcoin, or acquire an exchange that is long cash and short bitcoin. Liquidate the exchange and everyone is even.

It's gotta be doable with the amount of exchanges that we've seen that are short both!

Re: Crypto Market Roiled by New Allegations Against Tether, Bitfinex

#120

Post by Scoundreller »

vkou wrote: post #105
Scoundreller wrote: post #81

Earlier quoted context omitted.

You fail to understand how bank reserves work. > your bank is backed by about $0.10 for every dollar they owe savers. And the bank has the other $0.90 in long-term assets. While no bank can survive every depositor wanting every dollar out of their chequing account on the same day, there is something auditable backing each dollar of deposit.

Not to mention the insurance for that $0.90, should those long-term assets go caput.

And if the value of all long-term assets goes down by 50%, your 50% payout will buy just as much as it did before.
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