Anyone Seen Tether’s Billions? • Hacker News Board

Re: Anyone Seen Tether’s Billions?

#461

Post by graeme » Sat, Oct 09, 2021, 1:54 PM UTC

jimmydorry wrote: post #227

forgotmyoldname wrote: post #183

Earlier quoted context omitted.

Keep in mind that the original Ponzi scheme ran for quite a while and even had the media defending it as a great investment. Tether (and most crypto) seems like someone copied Ponzi's original scheme 1:1. Put in some money, transfer it to another format (Tether to other crypto, with Ponzi it was stamps), then eventually pull out loads of cash. Some people will undeniably get rich off it. But it's not sustainable.

The part I have never seen elaborated on in the "Tether is a Ponzi" claims is at what point will people using Tether make money? Tethers are IOUs to facilitate moving USD between financial institutions (mainly between exchanges, and mostly used by the exchanges themselves). You can spend $1 USD to get 1 Tether that is "redeemable" (by trade, not through the Tether company) for exactly $1 USD. A Ponzi requires some ki…

1. The high yield defi and centralized funds which have offered 9-20% on stablecoins. That’s ponzi level interest

2. The appreciation of crypto generally. If Bitcoin offered to pay out interest based on how many invested, people would see it more transparently as a ponzi

Re: Anyone Seen Tether’s Billions?

#462

Post by qeternity » Sat, Oct 09, 2021, 1:59 PM UTC

FatalLogic wrote: post #459

qeternity wrote: post #345

Earlier quoted context omitted.

May 11, 2019 - https://trade.kraken.com/charts/KRAKEN:USDT-USD Took me all of 10 seconds to find this.

Are you sure that actually happened? It should have been a huge story, but there seems nothing reported https://www.google.com/search?q=kraken+usdt&tbs=cdr:1,cd_min... If something that weird (a USDT price spike to $1000) really did happen, somehow nobody noticed and nobody was affected, in spite of millions of dollars of daily trades in that market at that time It's probably a glitch in Kraken's historical chart

Many people noticed. It’s not a big deal because the market is mostly wash trading.

It’s not a glitch. How you can say it’s “probably” a glitch is beyond me, you have zero evidence to support that. There have been other instances of Tether spiking well above $1, that is simply the most egregious.

Re: Anyone Seen Tether’s Billions?

#463

Post by graeme » Sat, Oct 09, 2021, 2:05 PM UTC

clemlais wrote: post #306

NhanH wrote: post #284

Earlier quoted context omitted.

> You’ve missed something, but I’m not sure what. This is what I'm trying to figure out too. Basically, how do you buy $1m worth of BTC/USDT perps without depositing $1m of USD into Binance? Let's say if we put in $100k USD with a 1:10 leverage, it means the position on Binance is wiped out if BTC drops by more than 10%. So the only way for this to work is to deposit $1mil of USD into Binance and opening the position…

You will need to monitor your positions (both long and short) and transfer the margin accordingly between each account.

On May 19th, Binance froze up and prevented people from adding margin. Lawsuit about it now. The claims are that Binance was insolvent and redid the trades to stabilize themselves. See Frances Kim for info or an FT article about the lawsuit.

Whatever the reason, no guarantee you can deposit collateral.

Re: Anyone Seen Tether’s Billions?

#464

Post by graeme » Sat, Oct 09, 2021, 2:08 PM UTC

darawk wrote: post #277

graeme wrote: post #53

Earlier quoted context omitted.

Of note, Tether values their reserves at redemption value. So if they have a loan to an insolvent company that trades at 25 cents to the dollar, Tether’s attestation values it at 100%. See emphasis of matter, page 2 of their attestation https://tether.to/wp-content/uploads/2021/08/tether_assuranc...

It's a little more complicated than that: > Management’s accounting policy is to value assets and liabilities at historic cost plus any accrued interest and less any expected credit losses, or otherwise the redemption value where applicable. The realisable value of these assets and liabilities could be materially different if any key custodian or counterparty incurs credit losses or substantial illiquidity. At least…

No, there’s a key OR in there. Two options:

1. Cost + interest - credit losses, OR

2. Redemption value

Seemingly they are free to choose either

Re: Anyone Seen Tether’s Billions?

#465

Post by graeme » Sat, Oct 09, 2021, 2:16 PM UTC

zz865 wrote: post #204

I dont understand why this is so big though. Surely few people own tether long term. Ie you use it to buy crypto, not sell your crypto and hold thether. I can imagine traders buy and sell a lot but that wouldn't add to tens of billions.

Somebody owns every single one of the 70 billion Tethers

Re: Anyone Seen Tether’s Billions?

#466

Post by FatalLogic » Sat, Oct 09, 2021, 2:56 PM UTC

qeternity wrote: post #462

FatalLogic wrote: post #459

Earlier quoted context omitted.

Are you sure that actually happened? It should have been a huge story, but there seems nothing reported https://www.google.com/search?q=kraken+usdt&tbs=cdr:1,cd_min... If something that weird (a USDT price spike to $1000) really did happen, somehow nobody noticed and nobody was affected, in spite of millions of dollars of daily trades in that market at that time It's probably a glitch in Kraken's historical chart

Many people noticed. It’s not a big deal because the market is mostly wash trading. It’s not a glitch. How you can say it’s “probably” a glitch is beyond me, you have zero evidence to support that. There have been other instances of Tether spiking well above $1, that is simply the most egregious.

Can you find any contemporary report of that May 11, 2019 USDT price spike incident at all? Because, if 'many people noticed' it, as you claim, then that should be easy

But I'll tell you now, to save you time: there are no such reports, because it did not happen.

I don't know anything about 'other instances', I only assume that spike on the Kraken chart that you linked to must be a glitch, because I found zero corroborating evidence for it. As you yourself have implied, such an insane price spike would have been a significant incident so it could hardly have gone unnoticed.

Your arguments would be more persuasive if you based them on facts.

Re: Anyone Seen Tether’s Billions?

#467

Post by SilasX » Sat, Oct 09, 2021, 4:36 PM UTC

qeternity wrote: post #438

SilasX wrote: post #380

Earlier quoted context omitted.

This is the kind of thing that would have been helpful to explain before using the notation. At least if your goal was to help others understand.

I appreciate you have some sort of issue with me from our other comments, and for that I'm sorry. It's not always clear when talking about complex domains, what is obvious and what isn't. My first comment in this thread explained why a simple USDT/USD short is not a good idea. I thought I had explained it in very simple terms, to help people with less experience understand. HN has a wide spectrum of users, and obviou…

No issue with you, just your arguments.

Re: Anyone Seen Tether’s Billions?

#468

Post by wpietri » Sat, Oct 09, 2021, 4:37 PM UTC

johanneskanybal wrote: post #364

wpietri wrote: post #207

Earlier quoted context omitted.

> I keep waiting for Yakety Sax to start playing, but to the true believers, it never does, and apparently all us nay-sayers are just neanderthal and don't see "the vision". It reminds me of the initial dot-com bubble, where anybody who asked questions was also painted as not getting it. Ditto the mortgage bubble, come to think of it. Then when the inevitable crash comes, nobody apologizes. It's either "who could hav…

I don't think that's fair, these concerns have been around for probably five years plus and get a lot of media attention. As someone invested in this area it does get a bit old and counter productive being scared of the various boogie mens while missing all the enormous upside so far. After all, tether is 3% of total market cap, I think it's fair to say the effect if they disappeared tomorrow would be a bit bigger th…

"Market cap" is not a real thing here, because it implies that there is an asset to value. Cryptocurrencies are synthetic commodities with no use value.

Your basic theory here is that bubbles always keep going up, even if sometimes they go down. But that's not how bubbles work. Tulip bulbs did not "grind to all time highs like allways". Neither did Beanie Babies. They both fell back to something approximating their use value. But what's the use value of some numbers on another person's computer? Approximately zero.

Re: Anyone Seen Tether’s Billions?

#469

Post by wpietri » Sat, Oct 09, 2021, 5:17 PM UTC

thebean11 wrote: post #397

api wrote: post #358

Earlier quoted context omitted.

I’ve seen this happen in companies with stupid projects. Same thing happened with the Iraq and Afghanistan wars. Anyone who dares ask questions is ignored, sidelined, or fired. Seems to be a general pattern when there is an economic or policy “bubble” and big players in an organization or sector are holding the bag. Everyone who holds cryptocurrency is holding Tether’s bag of poo. No they are not even the majority of…

> Everyone who holds cryptocurrency is holding Tether’s bag of poo. Or they recognize you can't time the market, and see upside despite a nearly-inevitable tether crash? If investors had been waiting for tether to crash they would have missed the run from $1k - $30+k, and I don't think you can claim with a straight face that was all tether manipulation. Again, can't time the market.

Everybody holding a bag of poo believes there's upside. That's why they're holding it. I will grant that the cryptocurrency ecosystem is incredibly good at not just finding but creating greater fools. [1] But the fool supply is finite, and more than 10 years on cryptocurrencies still aren't good for much practical. [2]

[1] https://en.wikipedia.org/wiki/Greater_fool_theory

[2] https://news.ycombinator.com/item?id=28781968

Re: Anyone Seen Tether’s Billions?

#470

Post by wallacoloo » Sat, Oct 09, 2021, 7:29 PM UTC

xondono wrote: post #303

trophycase wrote: post #298

Earlier quoted context omitted.

This just isn't really the case any longer. Crypto has matured a lot in the last few years. And if you're still regurgitating the same FUD from 2016 you're in for a big surprise.

> And if you're still regurgitating the same FUD from 2016 you're in for a big surprise. I’ve just given up on crypto at this point. I’m a big proponent in “invest in things you can understand”, and crypto is a space where very little people really understand what’s going. You can call that FUD if you want, but not acknowledging that crypto is a wild, wild west with a lot of shady corners, will set you up for a big r…

> I’m a big proponent in “invest in things you can understand”

How many people understand the US banking system? What a bank is allowed to do with your $, how inter-bank payments are settled; how a bank secures its records; under what circumstances a bank might lose its records; what recourse you have in the case that your bank loses your records or makes what you believe is a mistake… yet everyone gives money to their bank.

2012 Bitcoin was great: it takes all of an hour to understand the entire protocol, the act of building/installing bitcoind shows you the entire surface area, and everyone interacting with it understood as much about it as you did. Contrasted to the substantially more opaque banking system, where most people don’t understand it, but trust it due to the test of time.

2021 crypto is indeed different. Now it’s approaching similar complexity to the existing banking system. But do I still understand it better than banking? For the low-level abstractions: BTC, ETH, etc: absolutely — especially so now that we’ve seen them fork and understand the hypotheticals there better. Higher-layer social protocols like NFTs… maybe not. So I stay away from those. Crypto gives you optionality that existing digital investments completely fail at. So that’s nice from your “invest only in what you understand” perspective, right?