The Bit Short: Inside Crypto’s Doomsday Machine • Hacker News Board

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

#41

Post by ur-whale » Fri, Jan 15, 2021, 11:03 AM UTC

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…

>when tether is going down wouldn't you want to sell it thus creating pressure in btc/tether market

It will only create pressure on exchanges that allow you to actually sell USDT for BTC.

These will unfortunately be the same one that will likely go the MTGox route the quickest, leaving you a bag of virtual BTC that you can't withdraw.

Not your keys, not your coins, and doubly so for USDT.

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

#42

Post by JackFr » Fri, Jan 15, 2021, 11:04 AM UTC

yeneek wrote: post #32

quickthrower2 wrote: post #23

Earlier quoted context omitted.

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.

That’s not quite how it’s gonna work. It doesn’t matter what the Tether market cap is. The BTC market cap is coins x price. If Tethers represent 70% of inflow and they disappear, price is gonna come down. Likely a lot more than 3%.

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

#43

Post by atemerev » Fri, Jan 15, 2021, 11:04 AM UTC

It is not “doomsday machine”, it is “Tuesday”. Yes, Bitcoin is volatile, and crypto markets are manipulated (just like all other markets, e.g. tech stocks with Softbank-originated program trading right now).

If tomorrow Bitcoin will cost $10000, nobody will be surprised. Neither if it will be $70000. We are not building crypto systems for speculation.

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

#44

Post by pjc50 » Fri, Jan 15, 2021, 11:05 AM UTC

ur-whale wrote: post #34

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…

> it's likely the BTC ecosystem is going to undergo a very large "event". Up or down, who knows.

This seems to be one constant of BTC: "events" which you might expect to have a negative effect on the price often don't.

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

#45

Post by jimmydorry » Fri, Jan 15, 2021, 11:05 AM UTC

ALittleLight wrote: post #12

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…

I'm not really sure I understand this, neither finance nor crypto is my strong suit, but I think it's saying that most bitcoins are purchased with tether, and if the tethers are fake then that means most of the demand for bitcoin is fake. If the demand falls a lot, the price will too. Not sure if I'm misunderstanding this though. It's hard for me to believe people buying and selling bitcoin wouldn't notice this someh…

I don't believe any significant number of people buying Bitcoin are using Tether. Tether was aimed at the exchanges, institutional level investers, and day traders that wanted to move between dollars and crypto without creating taxable events (this loophole has since been closed). Its primary purpose was touted as allowing exchanges to move US dollars between themselves quickly and without using the banking systems directly.

Things may have changed in the last two or so years though, so maybe Tether's role radically changed.

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

#46

Post by leppr » Fri, Jan 15, 2021, 11:06 AM UTC

ur-whale wrote: post #34

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…

> 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. ...

No, Binance didn't get big because of Tether or leverage. It was already eating most of the crypto-only exchanges volume when altcoins were almost exclusively paired with BTC and before it acquired its perpetual futures business.

The main reason they managed to attract so many users is flamboyant altcoin pump and dumps orchestrated with ICO teams and Chinese whales, and pioneering exchange coins with the securities/utility token mash-up called BNB. Users came to chase the pumps, and stayed when they were invested in the platform itself.

Binance's thriving in its later phase even as Coinbase ramped up its altcoin listings can certainly be attributed to Tether though.

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

#47

Post by ur-whale » Fri, Jan 15, 2021, 11:08 AM UTC

comboy wrote: post #31

dannyw wrote: post #24

Earlier quoted context omitted.

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.

Please do your darndest to legally pay the least amount taxes possible and find every opportunity to change the system so taxes are lowered: you tax money will, in the vast majority of the cases, be wasted

Stop feeding the beast.

Starve it every opportunity you have.

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

#48

Post by PaulAJ » Fri, Jan 15, 2021, 11:09 AM UTC

So if I understand this correctly, you can go to one of these pyramid scheme exchanges, tank up on highly leveraged tethers, and then go sell them on Kraken. Do this often enough and you will drain the resources of the pyramid scheme, causing it to collapse. So you make a profit and provide a social good all on one smooth move.

Have I got that right?

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

#49

Post by dylkil » Fri, Jan 15, 2021, 11:10 AM UTC

>But during the same period, total issued Tethers increased by almost $5.4 billion — going from $4.6B to $10B

>The implication was shocking: there weren’t nearly enough dollars in all the domestic banks in the Bahamas to >back the Tethers that were floating around in the crypto market.

Doesn't match up with whats shown here[1], Bahamas banks are holding 110bn in customer deposits.

[1]https://stats.bis.org/statx/srs/tseries/LBS_D_PUB/Q:S:L:A:US...

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

#50

Post by csomar » Fri, Jan 15, 2021, 11:10 AM UTC

I'd be very careful to take advice from this guy.

1. He's definitively bad at investing. He doesn't have an investment strategy, and probably never heard of portfolio re-balancing.

2. He got in lucky and made some good returns. Now he thinks he is a genius because of that, and as a result can predict the next market move.

3. He didn't do good market research. For example, most of the volume in USDT is faked by the exchanges. Coinbase, GBTC, and CME each one of these is are probably bigger than USDT in size and volume. Unregulated derivatives are an alternative to USDT for more sophisticated traders and they are also huge.

4.USDT is now also used outside of the crypto-market. Not because it is great, but because of the practicality. This offshore unregulated market of USD is worth in the $ trillions. USDT having a market cap of a dozen billions is really peanuts. That being said, I'd be more interested in an investigative journalism on how Tether has succeeded in moving such amounts of money while avoiding all the KYC bonanza a regular joe (or business) has to go through.