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The Bit Short: Inside Crypto’s Doomsday Machine

crypto-anonymous-2021.medium.com

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Re: The Bit Short: Inside Crypto’s Doomsday Machine

#31

Post by comboy »

dannyw wrote: post #24
comboy wrote: post #6

I don't get it. tether sucks. If you hold tether it may turn into air. But your bitcoin is still bitcoin. Also, when tether is going down wouldn't you want to sell it thus creating pressure in btc/tether market and value of of tether/btc going up? It's always been clear to me that USD/BTC and USDT/BTC are two different markets. USDT is just another cryptocurrency. Many of them were scams and disappeared and many more…

Tether is lovely for many people, because there are many entry points without AML/KYC. This allows you to trade while minimising your exposure to the taxman, something that many people in crypto value. Of course, there is the calculated risk of Tether being seized, but that's part of doing business. Bitcoin itself was born out of active rebellion with the existing financial system, and depending on who you ask, rebel…

Please pay taxes. Change the system instead of giving it reasons to put you into jail. I don't think very highly of people who brag about not paying taxes which they are due.

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#32

Post by yeneek »

quickthrower2 wrote: post #23
comboy wrote: post #10

Earlier quoted context omitted.

Many value increases are irrational, whatever that means, I understand how it can be used to pump the price. I just don't understand how it takes bitcoin with it when collapsing.

If tether is pumping BTC then it’ll stop pumping BTC when it’s taken away. Weak hands will fold and then there will be a crash

Tether market cap is 24bil, Bitcoin market cap is 714bil. Its just 3%. I think that Tether isn't inflating BTC that much. The institutions that buy BTC like PayPal, Square, JPMorgan have much bigger effect on Bitcoin than Tether.

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#33

Post by JackFr »

I’ve always been, and remain still, a skeptic of all things crypto. I typically skip the crypto-focused articles on HN. I’m sure glad I didn’t today.

> The US Treasury should enforce 100% reserve requirements on all USD-pegged crypto stablecoins, with mandatory audits.

Laughter is really the best way to start my day.

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#34

Post by ur-whale »

Really good article, recommended read for anyone interested in crypto.

For me, it's almost 100% aligned with what I've felt was going on with Tether in the last 2 years.

Also, it sort of crystallized an answer to a question I've had about Binance for quite a while: how did they manage to get so big, so fast.

Answer: easy, they never had to establish proper on and off ramps to the traditional banking system and lured customers with unreasonable leveraged offers (which BTW is another Tether-related scam in itself: if you are an exchange with a shit ton of USDT, you can manipulate the price up and down, and trigger artificial margin calls whenever you damn please).

The real interesting question is though: what will happen when (not if) Tether explodes. There will be a sudden huge demand for exiting from USDT, and the only way looks like buying BTC on semi or fully fraudulent unbanked exchanges (good luck with that).

This will also trigger a big price unbalance between exchanges, and it remains to be seen if arbitrage channels will be able to weather the storm and if so for how long.

If you hold USDT, better get out quick unless you want to be left holding the bag.

If you hold BTC (as in: for real, in your own wallet, not on some shady exchange, not your keys not your coins), it's likely the BTC ecosystem is going to undergo a very large "event". Up or down, who knows.

If you hold BTC on an exchange, especially a shady one with 100x leverage type offerings, get your coins out of there ASAP before you get BTC-E'd [1]

[1]: https://en.wikipedia.org/wiki/BTC-e

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#36

Post by leppr »

maxbond wrote: post #25
comboy wrote: post #10

Earlier quoted context omitted.

Many value increases are irrational, whatever that means, I understand how it can be used to pump the price. I just don't understand how it takes bitcoin with it when collapsing.

Tether will almost certainly collapse, and then you'll have a lot of bitcoin chasing very few dollars. There is likely to be a stampede for dollars, which becomes a vicious cycle deflating the price of Bitcoin - the liquidity is consumed (Bitfinex is printing Tether because there aren't enough dollars to go around at unbanked exchanges, afterall) at the same time the downward volatility dramatically increases the per…

There are some Defi options on Ethereum that could allow you to short BTC with a USDC [1] collateral, like dYdX [2].

You would need to keep a small amount of ETH to operate the smart contracts, which could fluctuate in dollar value, but even after a black swan event, there's no reason that this decentralized infrastructure would not still be running, allowing you to redeem the USDC to real dollars.

[1] Circle dollars, 1:1 backed stablecoin from a well regulated issuer.

[2] https://trade.dydx.exchange/perpetual/BTC-USD

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#37

Post by tim333 »

comboy wrote: post #6

I don't get it. tether sucks. If you hold tether it may turn into air. But your bitcoin is still bitcoin. Also, when tether is going down wouldn't you want to sell it thus creating pressure in btc/tether market and value of of tether/btc going up? It's always been clear to me that USD/BTC and USDT/BTC are two different markets. USDT is just another cryptocurrency. Many of them were scams and disappeared and many more…

The argument basically is tether has been inflating the price of bitcoins. If tether collapses bitcoins will still be there but may trade at $3000/coin rather than $38000.

Comparing with gold it's like the price has been inflated by people buying it with forged dollar bills.

That said the author seems a bit new to this all with his shock at finding Bob is likely being scammed. Bitcoin has been linked with scams almost from the start, certainly since 2014 with MtGox. Things will go on in spite of the scams.

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#38

Post by atemerev »

dannyw wrote: post #24
comboy wrote: post #6

I don't get it. tether sucks. If you hold tether it may turn into air. But your bitcoin is still bitcoin. Also, when tether is going down wouldn't you want to sell it thus creating pressure in btc/tether market and value of of tether/btc going up? It's always been clear to me that USD/BTC and USDT/BTC are two different markets. USDT is just another cryptocurrency. Many of them were scams and disappeared and many more…

Tether is lovely for many people, because there are many entry points without AML/KYC. This allows you to trade while minimising your exposure to the taxman, something that many people in crypto value. Of course, there is the calculated risk of Tether being seized, but that's part of doing business. Bitcoin itself was born out of active rebellion with the existing financial system, and depending on who you ask, rebel…

“depending on who you ask, rebellion of the state itself” — as if it was a bad thing!

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#40

Post by pjc50 »

dannyw wrote: post #24
comboy wrote: post #6

I don't get it. tether sucks. If you hold tether it may turn into air. But your bitcoin is still bitcoin. Also, when tether is going down wouldn't you want to sell it thus creating pressure in btc/tether market and value of of tether/btc going up? It's always been clear to me that USD/BTC and USDT/BTC are two different markets. USDT is just another cryptocurrency. Many of them were scams and disappeared and many more…

Tether is lovely for many people, because there are many entry points without AML/KYC. This allows you to trade while minimising your exposure to the taxman, something that many people in crypto value. Of course, there is the calculated risk of Tether being seized, but that's part of doing business. Bitcoin itself was born out of active rebellion with the existing financial system, and depending on who you ask, rebel…

Like talking about storming the capitol, plotting to evade taxes is all fun and games and may even work for years, until it goes "too far" and everyone gets arrested.
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