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Tether: The Story So Far

kalzumeus.com

81–90 of 241 posts

Re: Tether: The Story So Far

#81
post #78

Earlier quoted context omitted.

All of your use cases involve anonymity. Crypto currencies don’t provide anonymity. Sure it’s not directly tied to your name and address, but it’s quite possible to make that tie. Such cases are on the news fairly frequently.

You're right that Bitcoin is only pseudo-anonymous. But there are cryptocurrencies like Monero which provides much better anonymity. Also, anonymity isn't black and white. It would be very difficult for the Venezuelan government to prevent you from buying Bitcoin in-person and then walking out of the country, with your Bitcoin keys written on a small piece of paper or even memorized.

All Venezuela has to do is to make it illegal for anyone to sell you Bitcoin.

Effectively, the current situation is rather close to that: the financial system is predicated on Know Your Customer and Anti-Money Laundering regulations that make moving large amounts of money for anonymous purposes dangerous for financial institutions. Given that cryptocurrency has struggled to provide any rationale for its existence other than the anonymous money flows that government regulation is trying to root out, dealing with it as a financial institution raises regulatory compliance red flags. As the article demonstrates, this means that your only real option is to rely on criminals and hope that money moves through the system fast enough that the government doesn't notice and the criminals handling your wealth don't skim too much off.

Re: Tether: The Story So Far

#82

Earlier quoted context omitted.

It is more about the general "conspiracy" tone of the article. It is like "OMG banks can create money, what a conspiracy" by some people who are surprised by the facts on how financial system works when they finally learn some basics. There is strong demand for any kind of vehicle which allows transferring value digitally outside of the traditional banking system. I don't think tether users trust tether because they…

There is strong demand for any kind of vehicle which allows transferring value digitally outside of the traditional banking system. Crypto supporters have been saying this for a decade, but outside of money laundering, drug sales, and hodle profiteering, no such demand has been shown to exist. Of course the huge demand has been spotted by many others and now there are loads of these "stablecoins". Some are more regul…

> no such demand has been shown to exist.

The success of companies like Square or Venmo show there is huge demand for an easy way to send money around.

You will say that they are inside the traditional banking system, and that is true. But when using them it feels like they are not.

Re: Tether: The Story So Far

#83
post #70

> I have looked, quite a bit. I have not found a good use case yet I'm always surprised that intelligent and knowledgeable people claim this. You haven't even found a single use case? You don't think buying a VPN anonymously is a good use case? Or see the need for uncensorable donations? (Remember how the U.S. shut down Wikileak's PayPal donations when they exposed their war crimes?) Or that cryptocurrencies allow bu…

Cryptocurrencies aren't anonymous. They also don't eliminate payment processor risk: fraudulent exchanges, hackers, and your own mistakes can all lose or lock you out of your money. And generally there's far less legal recourse when that happens with crypto.

I'm skeptical how many people in Venezuela saved their fortunes via Bitcoin et al, but if you have some data on that, I'd be curious to hear about it. In particular I'm curious why cryptocurrencies were a better means of rescuing your bolívar-denominated wealth than any other currency or investment vehicle such as real estate, gold, dollars, etc.

Re: Tether: The Story So Far

#84
post #78

Earlier quoted context omitted.

You're right that Bitcoin is only pseudo-anonymous. But there are cryptocurrencies like Monero which provides much better anonymity. Also, anonymity isn't black and white. It would be very difficult for the Venezuelan government to prevent you from buying Bitcoin in-person and then walking out of the country, with your Bitcoin keys written on a small piece of paper or even memorized.

All Venezuela has to do is to make it illegal for anyone to sell you Bitcoin. Effectively, the current situation is rather close to that: the financial system is predicated on Know Your Customer and Anti-Money Laundering regulations that make moving large amounts of money for anonymous purposes dangerous for financial institutions. Given that cryptocurrency has struggled to provide any rationale for its existence oth…

And all the U.S. had to do is make drugs illegal, and it would disappear. (Or not.)

> other than the anonymous money flows

Are you saying that anonymous money is immoral and should be made illegal, and in the process dismissing all use cases that benefit from anonymity?

And no, cryptocurrencies are perfectly legal in most of the world.

Re: Tether: The Story So Far

#85
post #67

Earlier quoted context omitted.

That's optimistic. I think it's mostly reserved with nothing.

I think it is fractionally reserved with bitfenix's btc deposits. A while back you could see their master address, which hundreds of millions of USD worth of btc.

It's not fractionally reserved. Fractionally reserved banking implies that only a fraction of the reserve is in liquid cash (And that the remainder exists as independently audited, but not immediately liquid investments, backed by an insurance policy.)

Tether has never been independently audited, whatever non-liquid reserves/investments they have are not backed by an insurance policy. It is not a fractional reserve. It's a con artist's idea of "Hey, I can just open a bank, take 80% of the deposit money, do 'things' with it, and claim I am running a fractional reserve."

Re: Tether: The Story So Far

#87

While I do believe Tether is pretty sketchy and I don't trust any so-called "stablecoin", it's also pretty clear the author has an ax to grind and has had for a while. Funny how every time people say it's so easy to prove Tether's frailty, they say there's way too much counterparty risk in shorting Tether. Shorting a scam should be a sure bet, but it has yet to happen. So, buyer beware.

There's a whole category of scams designed to scam short sellers who have spotted a scam that should be easy to short.

Re: Tether: The Story So Far

#88

> Tether has, in the words of Bitfinex CFO Giancarlo Devasini, “banked like criminals.” And no wonder. When the entire incumbent financial system is designed to treat innovation and disruption like a virus, the only way to make it through is to bend the rules. The financial industry is, by virtue of being the richest, the most entrenched money skimming operation ever devised by man. No way ever will they let newcomer…

The narrative of the big bad banks keeping the little guys down kinda falls apart when the little guys are lying through their teeth.

Re: Tether: The Story So Far

#89
post #70

> I have looked, quite a bit. I have not found a good use case yet I'm always surprised that intelligent and knowledgeable people claim this. You haven't even found a single use case? You don't think buying a VPN anonymously is a good use case? Or see the need for uncensorable donations? (Remember how the U.S. shut down Wikileak's PayPal donations when they exposed their war crimes?) Or that cryptocurrencies allow bu…

Cryptocurrencies aren't anonymous. They also don't eliminate payment processor risk: fraudulent exchanges, hackers, and your own mistakes can all lose or lock you out of your money. And generally there's far less legal recourse when that happens with crypto. I'm skeptical how many people in Venezuela saved their fortunes via Bitcoin et al, but if you have some data on that, I'd be curious to hear about it. In particu…

> Cryptocurrencies aren't anonymous.

Monero is.

> They also don't eliminate payment processor risk

Of course they don't magically solve all problems, but that doesn't make them useless.

> I'm skeptical how many people in Venezuela saved their fortunes via Bitcoin et al

I've read some article from people who did it, but I don't think it's common.

The problem with leaving the country is, how do you take your assets with you? You cannot easily move a house, and you will get searched at the border and your gold, dollars, jewelry etc will get confiscated if found. With cryptocurrencies you can theoretically move any amount, by just memorizing 12 or 24 words, by hiding a piece of paper or by encrypting it and placing it online somewhere.

Re: Tether: The Story So Far

#90
post #62
post #57

> The dominant use case for cryptocurrency is speculation. Speculators want to put value into the system, somehow have it become greater, and then take more value out of the system than they put in. This chestnut gets trotted out pretty regularly. What it ignores is the economic activity, largely untraceable, relating to payments outside of the US regulated financial system. Remember the ongoing problem in the US wit…

> This chestnut gets trotted out pretty regularly. What it ignores is the economic activity, largely untraceable, relating to payments outside of the US regulated financial system. You follow this up with some political points that I generally agree with, but I don't believe have anything to do whatsoever with any significant portion of cryprocurrency's use. Beyond speculation, cryptocurrency is used for: - Money lau…

> Beyond speculation, cryptocurrency is used for:

According to whom? The studies I've seen [1] say that a quarter of users are engaged in illegal activities and their share of all transactions is 44%. Their share is in decline as more applications are developed and userbase expands.

It should also be noted that there are many activities that are illegal, but not really harmful to anyone. For example, marijuana prohibition laws are obviously unjustified and are being overturned across the world these days.

[1] Eg https://www.law.ox.ac.uk/business-law-blog/blog/2018/02/sex-...

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