Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

wsj.com

Post reply on HN
Print view View original

31–40 of 241 posts

Re: Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

#31

Post by gruez »

initplus wrote: post #20

Tether as an organization operates with no transparency, and has a toxic symbiotic relationship with exchanges. I'm certain that Tether has backroom relationships with major exchanges - Tether provides liquidity to exchanges in the form of short term USDT loans. So Tether can claim their issues are backed by real reserves https://tether.to/wp-content/uploads/2021/05/tether-march-31... , omitting the convenient fact t…

>I'm certain that Tether has backroom relationships with major exchanges - Tether provides liquidity to exchanges in the form of short term USDT loans.

Is there a reason why exchanges even need such loans?

Re: Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

#32

Post by Geee »

It isn't really different from normal banking. Banks are allowed to create money by issuing debt, and the loan agreement itself works as the reserve for the issued currency.

In both cases the thing doesn't blow up if the debt is collateralized with something that keeps appreciating against inflation. It can go on forever, but people whose savings are decimated might get angry at some point.

Re: Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

#33

Post by firekvz »

For those trying to say that USDC is 'clear' and backed, remember that an attestation is not the same as an audit, circle has not provided any audit and same as tether, won't even mention an audit.

I choose to believe that what circle and coinbase are doing is creatinng a lot of liquidity by taking coinbase cash and turning it into USDC but at some point a lot of those USDC are being made the same way as tether, is just not real money comming into the ecosystem from either retail or institutions, but just imaginary money that is traded back and forth by coinbase bots to keep the price moving on their exchange

Re: Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

#34

Post by daenz »

knowaveragejoe wrote: post #22
ve55 wrote: post #19

Earlier quoted context omitted.

I think you're significantly overestimating how much experience and knowledge most that briefly dabble in currency have both over what is currently going on and over what types of finance scams have happened in the past.

I've heard "it's a scam" a lot recently, but nobody can articulate how in a way that is similar to any real, provable scam in the past. It's a giant, distributed scam?

I think its based on a fundamental idea of buying something that you know is worthless in order to sell it for more than you bought it by convincing the buyer that it isn't worthless. Eventually it will burn through all potential buyers and there will be no one left to sell to. Then it collapses because everyone finally agrees that it actually has no value.

Re: Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

#35

Post by sibeliuss »

simias wrote: post #23
young_unixer wrote: post #17

Earlier quoted context omitted.

Tether imploding would just mean a couple more years to stack up. People who don't understand the technology would flee, thinking it was just a fad, those that do understand it would stay, stack up and wait a few years.

Ah yes, the "technology". Any day now. Won't know what hit them. Around the corner really, alongside cold fusion and the chewing gum that replaces toothbrushes.

Oh blockchain! What a silly pipe dream.

Re: Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

#36

Post by nodesocket »

TacticalCoder wrote: post #16
Animats wrote: post #10

I keep thinking of Madoff's fund. It was once called "the Jewish T-bill". It worked just fine until there was a significant net outflow. Then, total crash, because the backing assets were not there. Tether is way too much like that. Remember, Tether has no upside . There is no reason to ever hold Tether for any length of time. [1] https://www.timesofisrael.com/before-dying-bernie-madoff-lif...

> Remember, Tether has no upside. There is no reason to ever hold Tether for any length of time. It looks like USDC, issued by a company co-owned by Coinbase (YC incubated right?) and Circle, is quickly replacing tether. One year ago there were about 1/10th of USDC compared to tether, now it's half. Apparently USDC are really fully backed by real USD and the smart contract for USDC can block any address containing US…

I hold a decent sized block of USDC via BlockFi and earn 8.6% APY. I realize there is inherent risk (after all, I am earning 8.6%) but compare that to 0.5% earned at Goldman Sachs or traditional FDIC insured bank accounts and it's a risk I am willing to take. By default, BlockFi issues GUSD as their stablecoin of choice, but Gemini (GUSD) market cap is only $145m, whereas USDC market cap is 22 with a B billion. Ultimately, I always swap all my crypto "cash reserves" from the default Gemini GUSD to USDC.

I stay away from Tether completely as it has a shaky past and unknown ties with China and exchanges.

Re: Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

#37

Post by lhorie »

Havoc wrote: post #3

Honestly stablecoins - specifically tether - is about the only thing about crypto that genuinely frightens me. Crypto rollercoaster - up down sideways and in circles - sure I'm game. Tether that is stable until it implodes...hell no. Even without direct exposure the blast radius worries me.

Honest question. How's Tether imploding different from e.g. a public company suddenly shutting down and its stock price going to zero? I imagine the two scenarios being similar in the sense that anyone holding tether would eat a big loss, but aside from the event obviously affecting investor sentiment, wouldn't it just be more or less business as usual for other coins? As in, couldn't BTC/ETH/whatever people just use other stablecoins instead?

I feel like the risk of full-on panic selling seems more and more unlikely as time goes by and more institutional investors get into crypto. And even if everyone did take out their money at the same time, isn't most of the value actually backed by the dollars of whoever was the biggest fool?

Re: Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

#38

Post by superkuh »

Bitcoin's reliance on Stablecoins? I think the wsj is confused and has this backwards. Additionally, like all mainstream media sources, they cannot seem to understand that Bitcoin is what happens on the blockchain and that 99% of the breathless hype about trading and finance bro stuff is completely off chain and only tangentially related to Bitcoin.

Re: Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

#39

Post by yokem55 »

canacrypto wrote: post #14

The title is misleading. Bitcoin isn't reliant on Stablecoins. DeFi, is but DeFi !== Bitcoin...

While tether gets piped around ethereum between centralized exchanges, few on chain defi applications actually use tether outside of a few stable coin focused swapping apps. Most of the lending and borrowing apps prefer USDC or Dai.

Re: Bitcoin’s reliance on stablecoins harks back to the Wild West of finance

#40

Post by wmf »

issa wrote: post #27

I think the most important thing to keep in mind is that EVERYONE knows Tether is a complete farce and this is already priced into the market.

Does that imply that "the market" would rise if Tether was eliminated? Why not do it?
Post reply on HN