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Tether: The Story So Far

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Re: Tether: The Story So Far

#101

Post by gamblor956 »

teknopurge wrote: post #99
gamblor956 wrote: post #27

Earlier quoted context omitted.

You can exchange your bank savings account for dollars (or Euro, or whatever). Hundreds of millions of people do this every day around the world without issue, because this is a solved problem.

Everyone cannot actually withdraw their balance to fiat all at once - this would be a bank run and wouldn't actually be allowed to occur.

True, but you can actually withdraw your balance.

You cannot withdraw your Tether balance. They literally do not allow that. The best you can do is get an intermediary coin that some places might let you change into cash or another crypto.

Re: Tether: The Story So Far

#102

Post by lawn »

teknopurge wrote: post #98
lawn wrote: post #75

Earlier quoted context omitted.

The minor difference is that you can withdraw your balance from banks, but you cannot redeem Tethers to what it's supposed to be backed by: U.S. dollars.

Everyone cannot actually withdraw their balance to fiat all at once.

You're right, due to fractional banking and if people do a bank run will happen and the bank will fail (unless someone saves it).

But it's at least possible to withdraw from banks. Redeeming Tethers is impossible.

Re: Tether: The Story So Far

#103

Post by derefr »

mettamage wrote: post #23

> 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. Don't forget that another relevant use case is anonimized payments. Let's say you deal with weapons. A good crypto could help. Let's say you sell porn videos: in some cases, one wants to pay with crypto because they don't…

The more formal way to say that is that cryptocurrency payments are "payments without the requirement of multilateral fiat recognition."

Fiat money works and has value internationally, because governments extend treaty relationships with one-another to offer the same sorts of protections against fraud committed by citizens of treaty partner nations, that they do for fraud committed by domestic citizens.

But when this breaks down, so does the value of fiat money:

• Countries can do things like creating export controls on their fiat currency, to prevent capital flight; or declaring a particular denomination of their currency valueless.

• And, when two nations are at war, their governments lose the ability to prosecute one-another's citizens by treaty, and so fraud by citizens of an enemy nation goes unresolved.

Cryptocurrency payments aren't inherently anonymous, but cryptocurrencies do inherently allow two parties to continue to trade productively, even when domestic laws or international treaties would otherwise prevent one or both sides of a fiat-facilitated trade between those same two parties.

Re: Tether: The Story So Far

#105

Post by YawningAngel »

rsync wrote: post #61

"Bitfinex claims to have believed, per their court filings, that CCC subsidized their services through net interest. ... "This would make sense for a financial institution, but it doesn’t make sense for a money launderer, because risk-free assets generate very little interest (1% of a billion dollars doesn’t pay for the minimum viable financial institution) ..." I find that interesting ... 1% of $1B is $10M ... and I…

Monzo and Starling are startup UK banks and I think both spent under $10M to get to the "minimum viable bank" state.

With that said, money is not the problem here. If Bitfinex had wanted to start a 'narrow bank' just to hold Tether, they would have failed: 1. Because they would not have been given a license 2. Because existing financial institutions would have refused to deal with them, as happened to Noble. 3. Because you cannot actually just park billions of dollars in the national reserve bank and collect interest on it.

So although such a business is probably viable in theory, it isn't possible in practice.

Re: Tether: The Story So Far

#106

Post by lacker »

I agree that the people behind Tether are fundamentally pretty sketchy, and it has a significant risk of collapse. However, Tether can't be totally ignored because as of right now, it's still the best tool for some things.

The main value of Tether is that the BTC-Tether market is the most liquid cryptocurrency market. So if you want to exchange Bitcoin into dollars in an all-cryptocurrency transaction, you will probably get the best rates into Tether, and be able to perform your transaction the fastest. If you plan on swapping out of Tether soon, then the systemic risk of Tether collapsing might only be a small problem for your application.

It's a shame that the most popular stablecoin is such junk behind the scenes. I think we would be better off if a different stablecoin with a more solid grounding was the most popular one. But for now, since Tether is the most popular stablecoin and popularity itself provides value for some applications, Tether is a useful part of the crypto ecosystem.

Re: Tether: The Story So Far

#107

Post by Sniffnoy »

arzt wrote: post #14

"Players in the crypto ecosystem will be shocked, shocked to know it got this bad, this quickly, but this has been an open secret for over a year." ---- I'm not entirely in agreement the crypto world will be shocked tether is insolvent. As long the the fiat gateways exist to exit the system with gains intact, most could care less about tether. It's musical chairs.

See Redoubt's comment. The use of "shocked, shocked" is meant ironically, in reference to a scene from Casablanca. In general when you see the word "shocked" doubled like that it basically always means this.

Re: Tether: The Story So Far

#108

Post by cperciva »

lacker wrote: post #106

I agree that the people behind Tether are fundamentally pretty sketchy, and it has a significant risk of collapse. However, Tether can't be totally ignored because as of right now, it's still the best tool for some things. The main value of Tether is that the BTC-Tether market is the most liquid cryptocurrency market. So if you want to exchange Bitcoin into dollars in an all-cryptocurrency transaction, you will proba…

if you want to exchange Bitcoin into dollars in an all-cryptocurrency transaction

What does that even mean? Dollars aren't cryptocurrency. If you're converting to Tethers, you're not converting to Dollars.

Re: Tether: The Story So Far

#109

Post by hinkley »

oarsinsync wrote: post #64
al2o3cr wrote: post #60

Earlier quoted context omitted.

Not sure if "hey, it's not JUST for speculation it's good for criming too!" is much of an argument, but you do you.

Protecting yourself from civil forfeiture abuses doesn’t make you a criminal. It does have the potential of protecting your assets from lawful theft, assuming you can hold onto your keys.

I was reading something recently, but I can't recall where, talking about one of the advantages of growing potatoes in feudal UK was that it was harder for the lord to steal them.

You never knew if the lord was a little short on money this month that he wouldn't show up with a wagon and cart off a bunch of your hay or vegetables (the fraction you were allowed to keep, not what you owed the lord) to sell.

Since you could leave root vegetables and tubers in the ground, there was a lot more friction in that process.

Re: Tether: The Story So Far

#110

Post by rideontime »

lacker wrote: post #106

I agree that the people behind Tether are fundamentally pretty sketchy, and it has a significant risk of collapse. However, Tether can't be totally ignored because as of right now, it's still the best tool for some things. The main value of Tether is that the BTC-Tether market is the most liquid cryptocurrency market. So if you want to exchange Bitcoin into dollars in an all-cryptocurrency transaction, you will proba…

If you'd read the linked article, you'd realize its premise isn't that "it has a significant risk of collapse," but that it has indeed already collapsed.
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