381–390 of 976 posts
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A deflationary currency was never going to be viable as money.
There are many cryptocurrency experiments, not all are deflationary to be clear.
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> Remember, with a stablecoin, there is no upside to holding. As always people around here tend to see the world from their point of privilege. If you are in Turkey, Sudan or Venezuela right now there is a huge upside in holding a stable coin pegged to the dollar. Only 13% of the world population is lucky enough to live on a stable democracy with a stable economic system.
If you live in a country with an unstable currency but without strong capital controls, the upside can be had by holding dollars . And that comes without the risk that your known-to-be-a-bit-dodgy nearly-dollar collapses.
It's hard to overemphasize how big a deal the Tether peg breaking would be (is?). At $78B, it dwarfs UST/Terra, and it's supposed to be an asset-backed stablecoin, not a risky algorithmic boondoggle like UST. If Tether plunges, it will take the broader crypto markets with it. Emphasis on the "supposed to be", since many, many, many unanswered questions have been raised about Tether's reserves and they've previously b…
Do people in crypto sincerely believe Tether is backed? I'm not being sarcastic here, I'm genuinely asking. I'm a bit of a skeptic of how the crypto market has developed overall, and the intentions of the major players, so I keep reminding myself that I'm biased, but I haven't believed Tether is even remotely close to being fully backed for a long while, and I've just sort of assumed everyone who's 'bought in' to the…
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Yeah it's a tricky one. It seems obvious that "digital money" is going to be very useful in a lot of ways, and in the future is almost certain to appear. There was a very brief period when bitcoin might have been the start of such a thing. When companies were adding support for it, and people were spending 200+ bitcoin on pizza, actually doing useful things like transferring money internationally, etc. But these days…
Monero still tries to fit in this niche. The only thing it's useful for is financial crime though - if your problem is just making a payment you can do it in dollars relatively easily and safely.
Transferring money from the EU to UK, or EU to USA, Peru, or Canada get more complicated and expensive though. Those are the kind of transfers I had in mind.
There are transferwise, and similar services, but even so it's not as cheap as it should/could be.
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"stablecoins in general" doesn't really apply here since the two in question work radically different. Collateralized vs Algorithmic. Theoretically the Terra UST stable coin didn't need reserves to keep the peg at $1, unlike Tether USDT, which does.
how do algorithmic stable coins work?
> DollarCoin: We propose skipping the middleman and providing direct proof-of-dollar with a blockchain that consists of videos of burning US $1 notes. Each video will be unique as the hash of every block header is required to be written on the dollar bill to be burnt; the block header includes the previous block’s hash, which means that each block is forced to build on every previous block, forming a valid blockchain
http://sigbovik.org/2014/proceedings.pdf
The fact is, people have convinced themselves that this is somehow a good idea. And then half the time, the person behind it doesn't actually burn any money and just arbitrarily mints coins. It's absolute lunacy.
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> Remember, with a stablecoin, there is no upside to holding. As always people around here tend to see the world from their point of privilege. If you are in Turkey, Sudan or Venezuela right now there is a huge upside in holding a stable coin pegged to the dollar. Only 13% of the world population is lucky enough to live on a stable democracy with a stable economic system.
Yup. I live in Turkey, and don't trust the local currency (Lira) and the government's power over banks to keep my dollars too. Crypto is the safest in that sense for me, and a stablecoin is ironically more trustworthy than my country's currency in general. Yet I don't trust USDT or UST so I'm on relatively more trustable USDC or BUSD.
Tether on the other hand has invested mostly in commercial credit, who’s counterparty they decline to identify. Given that they constitute something like the 5th largest commercial credit fund in the world on that basis & the other funds deny seeing them in their markets, it seems that they’re lending to ... lets say unorthodox counter parties.
Some have suggested that they’ve been lending to Chinese builders, but it seems more likely to me that they’ve been lending Tether to cryptocurrency trading houses and marking it up on their books. This would create a self-feeding circular dynamic at one or two removes; if so the whole thing could unwind quite spectacularly.
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The point I wanted to make is that many (most?) retail customers deposited USD at a CEX like Binance/Bitfinex in exchange for USDT. So your retail fiat dollar didn't go directly to Tether Limited, the exchange bought liquidity from them.
If the CEXes act in good faith, they'll hold corresponding amounts of USDT in a wallet. So those would have been the parties who paid $ to Tether.
But not necessarily in fiat USD. They could've paid in any instrument, as long as Tether accepted it. That side of the transaction is, by definition, not recorded on any chain. Or am I misunderstanding the situation?
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Note that while it's a good proxy this isn't same as going to the issuer ( https://tether.to ) and getting 1USD in exchange for 1USDT. Tether is still honouring 1-1 conversion for a minimum of $100K.
In my understanding that process takes several days at least and the reimbursement is done at the leisure of Tether, so I'd wager a lot of panicked investors won't take the official redemption route (that only works for large sums as well) and try to sell on the market instead. Hard to say if Tether will still honor the redemption if the price falls below 0.50 USD, as they likely don't have enough reserves on hand an…
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"Elsewhere on the website, there’s a letter from an accounting firm stating that Tether has the reserves to back its coins, along with a pie chart showing that about $30 billion of its dollar holdings are invested in commercial paper—short-term loans to corporations. That would make Tether the seventh-largest holder of such debt, right up there with Charles Schwab and Vanguard Group." Commercial paper is not dollars,…
> Commercial paper is not dollars, so tether effectively admits it is not backed. What do you think backs bank deposits?