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

Post by shkkmo » Sat, Jun 05, 2021, 4:28 AM UTC

gruez wrote: post #31

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?

Post by fastball » Sat, Jun 05, 2021, 4:39 AM UTC

daenz wrote: post #34

knowaveragejoe wrote: post #22

Earlier quoted context omitted.

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.

Post by cortesoft » Sat, Jun 05, 2021, 4:42 AM UTC

fastball wrote: post #90

JackFr wrote: post #62

Earlier quoted context omitted.

To paraphrase: - when a company goes bust you still have shares your share -- no one wants to pay for them with dollars. - when tether implodes you still have your tether, but you can't turn it into dollars because there aren't any dollars to convert it too.

Wasn't that GC's point though? The run-on-a-bank analogy only applies if you are holding Tether when it happens. If you are rightfully paranoid about Tether and therefore don't hold any, what is the damage for you?

Post by menzoic » Sat, Jun 05, 2021, 4:43 AM UTC

dannyw wrote: post #73

droffel wrote: post #65

Earlier quoted context omitted.

Given that the 8.6% return is contingent on those funds being loaned out to third parties in a manner that involves risk (like margin trading), I am highly skeptical of their ability to not lose your money on the timeline of a decade. The trustworthiness of Blockfi doesn't matter if they mess up and end up loaning money to someone who ends up unable to pay the bill - and the person on the hook if the borrower does no…

Dollar yields in the crypto universe have forever been higher. I've consistently got 12-25% per year from 2015 using exchanges like Bitfinex and haven't lost a single dollar. Why isn't it arbitrated away? Because institutions and market makers don't trust crypto. When they do, I'm sure it'll go as low as rest of market rates.

Post by menzoic » Sat, Jun 05, 2021, 4:45 AM UTC

schemescape wrote: post #55

nodesocket wrote: post #36

Earlier quoted context omitted.

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. Ultim…

It doesn't make sense to compare risk-free FDIC-insured deposits to stablecoins at BlockFi. Full disclosure: I did not find BlockFi's brief descriptions of their risk management strategies to be comforting.