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Tether: The Story So Far

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Re: Tether: The Story So Far

#161

Post by nostrademons »

simonebrunozzi wrote: post #142
tptacek wrote: post #141

Earlier quoted context omitted.

He was writing descriptively, not normatively. You think there should be other uses for cryptocurrency besides speculation; he's saying it is overwhelmingly used for speculation.

Agreed - also IMHO it's mostly used for speculation, and hopefully shouldn't be the case. Speculation can't last forever, but a few good use cases might.

Interestingly a lot of the speculation - at least today - is actually a bet on disaster. Many wealthy individuals and institutions are buying Bitcoin as a hedge against currency collapse. It's not so much that they think Bitcoin will be worth more in the future: it's that they believe the U.S. dollar and all other financial assets will be worth less. (Or in some cases, it's just part of a hedge: the rest of the hedge fund's portfolio will increase in value under any situation other than collapse of the economy, while Bitcoin will massively increase in value if there's a collapse. There's value in uncorrelated returns.)

Fear is often a lot stickier than greed as an emotion. If you believe you're going to get rich quick and it doesn't happen, you reevaluate your choices. If you believe you're insuring against becoming poor and it doesn't happen, well clearly your insurance worked.

Re: Tether: The Story So Far

#162

Post by vkou »

rolltiide wrote: post #80
falcolas wrote: post #77

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.

the other open secret is that you just create a new identity in an isolated sub namespace you ring fence all the addresses in that space with Monero over VPN or TOR: Monero swapped to Bitcoin, Monero swapped to Ether, Monero swapped to Tether (ERC20/OMNI/TRC20), a general balance in Monero since merchants accept that too, and transact there. Swap back out to Monero if you need a withdrawal. Pencil pushers can track a…

So, once you drive all the normies off the system, what makes you think that you're ever going to manage to turn your Monero into fiat?

Re: Tether: The Story So Far

#163

Post by YawningAngel »

H8crilA wrote: post #144
YawningAngel wrote: post #105

Earlier quoted context omitted.

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. Becau…

> 3. Because you cannot actually just park billions of dollars in the national reserve bank and collect interest on it. Actually you can, it's called Interest On Excess Reserves (IOER) in the US, which has been the only short term rate enforcement mechanism of the FED since the crisis days. Till that whole repo thing happened, just recently. https://en.wikipedia.org/wiki/Excess_reserves The rest is true though.

The Fed is not obligated to allow you to open an account, and in such a case it very likely would not allow such a thing: https://www.bloomberg.com/opinion/articles/2019-03-08/the-fe...

Re: Tether: The Story So Far

#164

Post by vkou »

nullc wrote: post #119
wmf wrote: post #95

Earlier quoted context omitted.

Never 100% backed. Clearly there was some money.

Still missing the context on that, because AFAICT the reports seem to show that it was at one point 100% backed. It's very possible that I'm missing something, since this isn't something I've paid a lot of attention to (as it always seemed obvious that it would eventually end up in this state).

Suppose that you became a bank. I create an account, and deposit $100 into you.

You take that $100, keep $20, and then lend the other $80 to a heroin-addled homeless person. He swears he'll give it back next year, plus interest. And gives you a receipt and everything.

Now, suppose that you are dragged up into a courtroom, over your mishandling of customer funds. You point out that no funds were mishandled - you have $20 in cash... and an $80 IOU from a junkie. You are fully capitalized! Solid as houses!

Reality: You're not. Any independent auditor with two brain cells to rub together will not value that $80 IOU at face value (The chap is highly unlikely to pay you back.) Your bank is actually insolvent.

Tether Reality: Bitfinex/The Tether Corporation played a shell game, such that they are '100% capitalized' if you add up their cash reserves + IOUs. The IOUs aren't worth the paper they are printed on.

It's possible that at some point in the distant past, they were 100% capitalized, but given their resistance to external audits, it's highly unlikely that it has been the case.

The most amazing thing about this entire adventure is that USDT/USD still trades at par. It seems like BitFinex could host a press conference, with the entire leadership team wearing T-Shirts that say "WE STOLE ALL YOUR MONEY", and it wouldn't move the market (The 'bitcoin enthusiasts' would obviously interpret it to be a sarcastic dig at all the bad publicity surrounding them.)

Re: Tether: The Story So Far

#165

Post by Geee »

tptacek wrote: post #141
Geee wrote: post #138

Isn't it curious that he writes a lengthy post about frauds made possible with the current banking system (trust-based reserve) and then doesn't find any use for cryptocurrency? This is exactly the reason why Bitcoin was invented; its supply is mathematical and can't be over-inflated. Satoshi even included the criticism in the Bitcoin's Genesis block: "The Times 03/Jan/2009 Chancellor on brink of second bailout for b…

He was writing descriptively, not normatively. You think there should be other uses for cryptocurrency besides speculation; he's saying it is overwhelmingly used for speculation.

I don't think there are as many speculators as he thinks. Most cryptocurrency users believe that it's a better form of money and want to own it. That is not speculation.

Re: Tether: The Story So Far

#166

Post by Geee »

bko wrote: post #154
Geee wrote: post #138

Isn't it curious that he writes a lengthy post about frauds made possible with the current banking system (trust-based reserve) and then doesn't find any use for cryptocurrency? This is exactly the reason why Bitcoin was invented; its supply is mathematical and can't be over-inflated. Satoshi even included the criticism in the Bitcoin's Genesis block: "The Times 03/Jan/2009 Chancellor on brink of second bailout for b…

> Obviously Tether (or any private stablecoin like Libra) is even worse than a regulated fiat currency, and should be strictly illegal. Having a system of tokens that serve as an IOU to a stable basket of goods should be illegal? That's essentially how banks work, you give them money, they give you an IOU. I imagine a stable coin could be designed with enough proofs and audits to give you certainty. I think a well ad…

The learning rate of markets is too slow for it to work. There will be too many tethers and other scams before they can be properly proofed and audited. And after that we learn that it requires tax payers, law makers and nukes to properly secure a stablecoin.

Re: Tether: The Story So Far

#167

Post by alwillis »

falcolas wrote: post #77
lawn wrote: 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…

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.

Crypto currencies don’t provide anonymity.

It’s pretty easy to make bitcoin transactions anonymous.

1. Wasabi Wallet runs over Tor and has built-in support for CoinJoins: https://wasabiwallet.io

2. Samourai Wallet has Whirlpool, another mixing technology, among other security features: https://www.samouraiwallet.com/features

3. You can skip the usual exchanges and use Bisq for peer-to-peer trading over Tor, including selling BTC for fiat: https://bisq.network

4. Lightning network (a layer 2 network on top of Bitcoin) has exploded in popularity; it’s also a major privacy win for transactions: https://medium.com/breez-technology/lightning-network-routin...

Most wallets nowadays don’t let you reuse addresses; even with plain vanilla Bitcoin transactions, this makes it much more difficult to link an identity with a Bitcoin transaction.

And this is before Taproot and Schnorr signatures are added to the Bitcoin protocol in the not too distant future: https://blog.bitmex.com/the-schnorr-signature-taproot-softfo...

There's more but the point should be clear: it’s actually fairly easy to dramatically increase the anonymity of bitcoin transactions.

Re: Tether: The Story So Far

#168

Post by rolltiide »

vkou wrote: post #162
rolltiide wrote: post #80

Earlier quoted context omitted.

the other open secret is that you just create a new identity in an isolated sub namespace you ring fence all the addresses in that space with Monero over VPN or TOR: Monero swapped to Bitcoin, Monero swapped to Ether, Monero swapped to Tether (ERC20/OMNI/TRC20), a general balance in Monero since merchants accept that too, and transact there. Swap back out to Monero if you need a withdrawal. Pencil pushers can track a…

So, once you drive all the normies off the system, what makes you think that you're ever going to manage to turn your Monero into fiat?

I don't. It also works.

Re: Tether: The Story So Far

#169

Post by tomp »

YawningAngel wrote: post #105
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. Becau…

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

Not sure about that... Looking at Monzo's Wikipedia page,

> In February 2017, Monzo raised £19.5M [...]

> in April 2017 their UK banking licence restrictions were lifted, enabling them to offer a current account

So they only became a "real" bank after having raised substantial capital.

Re: Tether: The Story So Far

#170

Post by buboard »

skywhopper wrote: post #83
lawn wrote: 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…

> there's far less legal recourse when that happens with crypto

cryptocurrencies are cash, not credit cards or banks. It's a category that is completely missing from the internet. hence all the drawbacks, but they have their also many uses, most of them hitherto unimplemented (because we never had cash on the net)

> why cryptocurrencies were a better means of rescuing your bolívar

I presume because bitcoin was available where all other currencies weren't

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