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Except they do allow redemptions: https://app.tether.to/app/signup
Nobody in the history of crypto has ever demonstrated this. Not a single person.
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However three years on, crypto still does not have a "killer app" and is 99.99% used for speculation. The killer app is decentralized, permissionless, open source, and censorship resistant network. Bitcoin's narrative has had to morph from "digital currency" to "digital gold". Gold morphed from worthless rocks in the the ground, to coins traded by traveling merchants, to stores of value that were eventually centraliz…
The hurdle for bitcoin is finding a way for people to turn it into a currency they can use. This is where you end up with a centralized exchange layer built on top of it. I can make a $12,000,000 transaction for $.35 but if I actually want to get the money, I have to pay 2.5% to a legit exchange or take my chances on some janky ass exchange. Why not just transfer the money via ACH and pay the small fee and save mysel…
I pay 0.15% and the exchange has been around for a decade without ever losing funds. It's even now licensed as a bank in the U.S.
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> But who is selling their (temporarily) valuable bitcoin for worthless tether instead of USD? You're asking what the utility of stablecoins is: Stablecoins are widely used as a legislatively advantageous on- and off-ramp for the whole crypto market. Off-ramp: If people want to sell BTC or other volatile tokens because they want to realize profits, the obvious thing would be to sell for fiat (USD/EUR). But due to tax…
> If people want to buy a certain token they first go into Tether. This is usually for bypassing local legislation That alone should be a red flag. I know there are a lot of narratives about people in repressive governments using Bitcoin to take their meager savings out of the country or carrying their net worth across borders in mind wallets, but Tether isn't targeting these people. Tether has very high minimum purc…
That's not the primary use (by dollar volume, it is also helpful to streamline participation in the entire crypto ecosphere regardless of local regulations).
But Tether's for market making. Arbitrators need a way to transfer USD denominated amounts between exchanges to operate.
On top of market making, you'll have smallish (7-8 figure USD) trading shops running strategies across multiple cryptos that just don't have fiat ramps, or they want to tap into volume across exchanges that don't have fiat ramps. If you're one of these customers, you can get in touch with Tether and make redemptions, but you probably don't need to do that anyway because you're working through a prime broker.
This activity doesn't care if the market's bull or bear, so it continues to grow over time in either trend.
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I agree, and it does surprise me, but I think it's a mix of 1. tether has been around a lot longer and is on a lot more exchanges 2. tether is.. less well controlled by US regulators and hence better for.. questionable exchanges to list.
Challenge there is that it doesn't fit the narrative that Tether give about the demand being from "institutional investors". That kind of customer tends (IMO) to be very risk averse. Of course it is possible that Tether are getting custom, but not the kind that wants to leave a bank trail. But if that's the case they're going to fall foul of the regulators sooner or later...
Market makers and trading shops with 7-8 figure funds playing with riskier cryptos or trying to tap worldwide volume.
It's not MicroStrategy and Mass Mutual Insurance using Tethers
I agree that USDT is fishy and it may be behind a large percentage of the gains in BTC and the other coins. However, there is also another possible explanation. When investors want to buy BTC they first to go Binance and ask for USDT in exchange for USD. Binance creates new USDT for them. Then they use the USDT to buy BTC (reverse causality). Just saying it's possible, but I believe Jacob Oracle to be right.
Can binance "create new USDT" or do they need to ask Tether to create it for them, exchanging USD?
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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.
Gold has an intrinsic use value. Maybe not as high as its current monetary value, but it isn’t zero. Bitcoin has no floor. You can only exchange bitcoin for taxes if someone wants the bitcoin.
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the limitations have been researched extensively outside of the echo chamber of bitcoin development. It is possible to scale a utxo system like bitcoins to hundreds of millions of txs per day. Xthinner[1] can compress blocksizes by 99%, but bitcoin devs have ignored this with handywavy arguments. [1] https://github.com/jtoomim/xthinner-spec
A bitcoiner pinged me and asked for my comment here. It really sucks that people are so easily bamboozled by dishonest scammers. In the original bitcoin software a node would receive every transaction made while it was online twice: once when the transaction was first relayed, once when it was placed into blocks. This was obviously wasteful, so we created and deployed a reconciliation scheme that exploits the fact th…
Thanks for this.
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>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…
This is a very amateurish attempt at analyzing what "Bitcoin community" (which you haven't even really defined properly either) are thinking or are interested in. Bitcoin reddit is a bunch of kids who like memes and hating on the FED. I know a lot of serious investors who would never be seen posting or commenting there. It is just not a place for a lot of people.
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Yes - none of this proves that Tether has any reserves. It just proves that someone else believes they do...which we already know.
This is moving the goalposts. I don't think anyone thinks tether has full reserves. They literally admitted that they don't[1]. However your original claim of "you can't redeem USDT" is misleading at best. [1] wikipedia: "On 30 April 2019 Tether Limited's lawyer claimed that each tether was backed by only $0.74 in cash and cash equivalents"
In any case, if indeed (still) true, having their lawyer say that USDTs are backed 74% by cash, makes it arguably safer and more liquid than any US bank, where cash backing your account balance represents a single digit percentage (I would estimate, happy to learn the factual number). Not saying that it shouldn't strive for 100% cash backeding (I think it should be), but noting that if you're concerned about Tether's cash liquidity, you probably should be even more concerned about your bank's chequing account.