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Tether price manipulation

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Re: Tether price manipulation

#231

Post by paulgb »

nicky0 wrote: post #223
paulgb wrote: post #203

Earlier quoted context omitted.

Indeed. A thought experiment: say the US government created a USD-prime currency that floated freely from USD. You could still use the USD in private transactions, but the US government would only transact and tax in USD-prime. What would be the fate of the original USD? My belief that it would go to zero. I’m curious whether “fiat is backed by nothing” proponents would disagree.

Both fiat currency and Bitcoin are backed by the same thing: mass belief. An incredibly powerful thing.

Yep, but my point is that one is mass belief that the US government will continue wanting USD, the other is a mass belief that other people will continue wanting BTC. Both could be right, both could be wrong, but they are not the same proposition.

Re: Tether price manipulation

#232

Post by qeternity »

csomar wrote: post #222
qeternity wrote: post #219

Earlier quoted context omitted.

No, instead of just stating it, explain to me. Tether's reserves only matter when people try to redeem Tethers. This is currently not possible. So it is purely a trust game right now, and everyone has an incentive to trust (or turn a blind eye) that Tether is playing by the rules.

> Tether's reserves only matter when people try to redeem Tethers. This is currently not possible. This is why being liquid and freely trade-able matters. Tether is fully redeemable if you can trade it against other crypto/stable coins. Want to redeem USDT? exchange it to USDC and then withdraw to your bank account.

No, trading is not redeeming. The fact that you will buy it from me or swap me USDC does not prove that they have any reserves.

So again I ask - how do we have any proof that Tether has the reserves they claim they do?

Re: Tether price manipulation

#233

Post by csomar »

tomtomtom777 wrote: post #17

I still don't quite understand how they can manipulate the price. The price of a USDT is 1 dollar. They give out new USDT for $1 a piece. Sure, they may be spending these dollars elsewhere, thus holding a fractional reserve. Sure this may illegal and get them in trouble. But this doesn't effect the dollar value for which these USDT's and thus Bitcoins are traded. As long as a USDT is $1, nobody is manipulating the pr…

> I still don't quite understand how they can manipulate the price.

They largely can't (especially that a good fraction of Bitcoin is now held by institutional investors). But it makes up for a good story.

Re: Tether price manipulation

#234

Post by shuntress »

Born_Again wrote: post #181
shuntress wrote: post #56

Earlier quoted context omitted.

>Bitcoin's narrative has had to morph from "digital currency" to "digital gold" The narrative around bitcoin has always been "It is digital currency. It works like gold". Hence the notion of "mining" . EDIT: downvote me if you want but you are flat wrong Section 6 in the bitcoin whitepaper explicitly likens bitcoin to gold [0] > The steady addition of a constant of amount of new coins is analogous to gold miners expe…

>>Bitcoin's narrative has had to morph from "digital currency" to "digital gold" I wholeheartedly agree with this. Let's look at some Reddit /r/bitcoin posts in January 2014: https://redditsearch.io/?term=&dataviz=false&aggs=false&subr... People were discussing bitcoin being used as a digital currency. There was talk of bitcoin being accepted on Overstock.com, TigerDirect, and using bitcoin apps on phones as a digita…

*The narrative around bitcoin has always been "It is digital currency. It works like gold".*

I don't think we need to get into whether or not gold is a currency or a commodity but you are fooling yourself if you think that the price of gold is driven by jewelers and PCB fabs.

Re: Tether price manipulation

#235

Post by patagonia »

JohnJamesRambo wrote: post #119
qeternity wrote: post #15

The problem is that in the early days of @Bitfinex'ed this was all a bit of a sideshow because there was genuinely large interest from retail and the outcome of crypto was far less certain. However three years on, crypto still does not have a "killer app" and is 99.99% used for speculation. Bitcoin's narrative has had to morph from "digital currency" to "digital gold". But in the depths of the March panic, Tether jum…

The killer app for Bitcoin is escaping government fiat money that is backed by literally nothing at all and is being printed at increasingly alarming rates. 40% of all USD ever created were “made” in 2020. That will have repercussions for decades and isn’t a currency I want to stay in. https://fred.stlouisfed.org/series/M1 Ironically (or not) Bitcoin was created in 2009 right when that graph gets really crazy.

Money is not property. Money is an entry on a ledger, which tracks credits and debits. So yes, fiat currency is not redeemable for a physical asset. But if it was redeemable, what ensures that say gold or a chicken will suffice to settle a debt or serve as credit for a future transaction. Chickens die and gold is only as valuable as your skills as a trader. The ledger and all of the social norms and institutional structures that accompany it is what maintains financial wealth.

Preventing debasement of currency via inflation via printing money, which a lot of people use as their go to argument against fiat money, is simply adding economy wide debt to the ledger. This is necessary from time to time especially during crises and especially in a services/financial services/ intellectual property heavy economy.

If no money existed, at all, how would you receive compensation for providing work of an IP nature to your neighbor. You would need either a perfect trade (you really want their chicken it’s just the right amount of chicken for you) or you take an iou. Which is a debt. Now have them write that iou down on a piece of paper and hand it to you. Your neighbor just printed money. Not so crazy.

Re: Tether price manipulation

#236

Post by csomar »

graeme wrote: post #190
otherjason wrote: post #129

Earlier quoted context omitted.

CME Group still offers Bitcoin futures, along with options: https://www.cmegroup.com/trading/bitcoin-futures.html

Oh thanks. Where can you trade those? Couldn’t find them on questrade.

The minimum for CME is 5 bitcoins ($200k). So I guess they are for the big dudes?

Re: Tether price manipulation

#237

Post by freewilly1040 »

fuzzylightbulb wrote: post #191
JohnJamesRambo wrote: post #119

Earlier quoted context omitted.

The killer app for Bitcoin is escaping government fiat money that is backed by literally nothing at all and is being printed at increasingly alarming rates. 40% of all USD ever created were “made” in 2020. That will have repercussions for decades and isn’t a currency I want to stay in. https://fred.stlouisfed.org/series/M1 Ironically (or not) Bitcoin was created in 2009 right when that graph gets really crazy.

> backed by literally nothing It is the only thing the government accepts for tax payments. Given that you can be arrested for not paying your taxes it is "backed" by the barrel of a gun, a threat to your very being. In one sense this is the only real thing there is.

This argument doesn't really refute the argument for bitcoin as digital gold. It's not as though you can't exchange bitcoin to pay your taxes.

Re: Tether price manipulation

#238

Post by paulgb »

csomar wrote: post #214
paulgb wrote: post #207

Earlier quoted context omitted.

I mostly agree with your skepticism on USDT driving BTC price, but I disagree with this: > There is, however, a good proof that they do: Tether has held the 1:1 beg pretty well recently. All this proves is that they have something in reserve, not that it is 1:1 backed. Most modern banking operates on a fractional reserve system, but when I take cash out of my bank account I get a cash dollar 1:1 with what they debit…

That's good for 97% of the time, but not for the 3% where prices either crashes or goes way-up (volatility blackswan). These stressful situations tests the 1:1 peg. (which is why I mentioned the $4000 price crash). They probably have 1. good reserves ratios and 2. very liquid assets as reserve.

The difference between having 1:1 backing and “pretty good” reserves is that if they claim (as they do) to be 1:1 backed and it were to come out that they were not, it could spark a “run on the bank” type scenario for everyone to get their money out while they can.

Re: Tether price manipulation

#239

Post by csomar »

dandanua wrote: post #229
csomar wrote: post #201

OP gives no proof that Tether is not holding 1:1 reserves. There is, however, a good proof that they do: Tether has held the 1:1 beg pretty well recently. Bitcoin price dropped to $4.000 last year and Tether exchange rate has held pretty well. It is important to mention that USDT is still liquid despite the lack of USD on/off-ramps. People regularly sell USDT on the offline market, and can exchange to USDC on many ex…

The proof is that Tether almost never deleted any of its tokens, even when Bitcoin dropped significantly, e.g. from $10k to $5k in 2020. Does it mean that no one wanted their USD back from Tether organization? I highly doubt it.

They do: https://coinmarketcap.com/currencies/tether/

Re: Tether price manipulation

#240

Post by hannasanarion »

londons_explore wrote: post #172
alisonkisk wrote: post #165

Earlier quoted context omitted.

There's a lot of room for delayed fraud, same as when banks fail. Imagine I secretly remove the contents of everyone's safe deposit boxes. I get rich selling what I stole, but no one is any poorer until much later when they try to cash out their treasures and realize they are gone. USDTether is an empty safe deposit box.

My argument is if some people aren't regularly looking in their safe deposit box, the fraud might never cause a collapse.

The New York Attorney General is going to look into the box on January 15.
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