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

Tether starting to lose its peg too, after Terra did

community.intercoin.org

Post reply on HN
Print view View original

471–480 of 976 posts

Re: Tether starting to lose its peg too, after Terra did

#471

Post by KoftaBob »

nstart wrote: post #454
KoftaBob wrote: post #448

What exactly is the point of stablecoins that are pegged to the USD? Why wouldn't I just accomplish the same function with an actual USD?

It's easy to trade on crypto platforms with stable coins. A lot of people will typically buy tether and then use tether to buy other coins using the exchange of their choice. It works the other way around too when you want to store your value in a predictable form if a currency like bitcoin is doing a dip. Just convert your bitcoin to usdt and hold it there till btc starts going back up.

So it's meant to bypass the slowness of ACH and other aspects of the traditional banking system that the USD is limited by? Interesting.

Re: Tether starting to lose its peg too, after Terra did

#472

Post by Mvandenbergh »

jmyeet wrote: post #455
shafyy wrote: post #55

Earlier quoted context omitted.

> If you've been honestly working on the assumption that it is, then you deserve to lose your (real) money to some crypto VCs on an island somewhere. The sad reality is that many poorer and financially illeterate people have been tricked by VCs and other grifters into this with billions of dollars spent in advertising. So, no, they don't deserve to lose their money to these assholes. These assholes need to be prosecu…

I actually hate people disavowing themselves of responsibility here. While there is definitely some shady stuff in Crypto (particularly NFTs, which seem to be 99% scams), there's a certain level of personal responsibility required here. People saw the meteoric rise of Bitcoin and got a serious case of FOMO. Everyone wanted to be on the next Bitcoin. This, ultimately, is the American Dream: to get rich by doing nothin…

The reasons this is nonsense are twofold:

First, I have never actually seen any comments here disavowing themselves of responsibility. It is always aimed at protecting others and this is rooted in the obvious fact that a very large number of people are not (and we do not expect them to be) experts in investment. That assets can go up or down is one thing, and nobody can be protected from that, but there is an extensive body of law intended to protect people from outright falsehoods. So I can say, "you should invest in ConCoin, it's going to the moooon" and that maybe is allowed. I cannot say "we have pegged this to the value of the dollar if I know that I have taken no care whatsoever to even try and do that".

Second, refusing to set a floor on falsehoods using regulatory tools makes doing business much more expensive for people who are not scammers. This is a classic "market for lemons" effect. If I have a great idea that I would like to raise money for using, say, a utility token [n.b. not currently allowed] then if the last few such tokens have been exit scams, I will raise no money. Maintaining a certain level of trust is a pool from which we can all draw. It has in fact been shown that growth in low trust economies is systematically lower than in high trust economies.

Re: Tether starting to lose its peg too, after Terra did

#473

Post by eli »

jmyeet wrote: post #455
shafyy wrote: post #55

Earlier quoted context omitted.

> If you've been honestly working on the assumption that it is, then you deserve to lose your (real) money to some crypto VCs on an island somewhere. The sad reality is that many poorer and financially illeterate people have been tricked by VCs and other grifters into this with billions of dollars spent in advertising. So, no, they don't deserve to lose their money to these assholes. These assholes need to be prosecu…

I actually hate people disavowing themselves of responsibility here. While there is definitely some shady stuff in Crypto (particularly NFTs, which seem to be 99% scams), there's a certain level of personal responsibility required here. People saw the meteoric rise of Bitcoin and got a serious case of FOMO. Everyone wanted to be on the next Bitcoin. This, ultimately, is the American Dream: to get rich by doing nothin…

This is how almost every con works. The people who fall for advance check scams think they’re getting easy money and the greed clouds their judgement. It doesn’t absolve the perpetrator.

Re: Tether starting to lose its peg too, after Terra did

#474

Post by unmole »

marcinzm wrote: post #438
unmole wrote: post #378

Earlier quoted context omitted.

FDIC is insurance, it's not a backing asset. And it's limited to 250k USD.

And without it you get occasional massive runs on banks since they don't have actual full backing. Moreover the government will bail banks out if needed providing another but non-guaranteed layer of protection. Maybe a better way to say it would have been that banks are safer because they're backed by the government including FDIC, bailouts, regulations, oversight, etc.

> And without it you get occasional massive runs on banks

FDIC doesn't prevent runs on banks. It only pays out after a bank is declared insolvent and there's nobody willing to buy the bank.

Banks are regulated for good reasons which make them safer. But at the end of the day banks are in the business of transmuting unsafe long term debt into safe demand deposits.

Re: Tether starting to lose its peg too, after Terra did

#475

Post by kevingadd »

bspammer wrote: post #250
tcharlton wrote: post #140

Earlier quoted context omitted.

Matt Levine did a great write up of algorithmic stablecoins here: https://www.bloomberg.com/opinion/articles/2022-05-11/terra-... "1. You wake up one morning and invent two crypto tokens. 2. One of them is the stablecoin, which I will call “Terra,” for reasons that will become apparent. 3. The other one is not the stablecoin. I will call it “Luna.” 4. To be clear, they are both just things you made up, just numbers o…

One thing I don’t understand here: where does the smart contract get the information of the current luna/usd exchange rate? It can’t be an api call surely, it must be on-chain somehow.

Things like this rely on off-chain "oracles"

Re: Tether starting to lose its peg too, after Terra did

#476

Post by [deleted] »

pjc50 wrote: post #349
ckastner wrote: post #336

Earlier quoted context omitted.

> Step 2: find a bank willing to let you be a money transmitter for millions of anonymous pseudo-dollars whose owner you have no idea of, setting off every single money laundering alarm in the building. This was the biggest red flag behind Tether to me, where we are talking about not millions but billions of pseudo-dollars. The risk profile is beyond anything reasonable that a bank could or would accept. Tether minti…

The billions of dollars of _backing_ should show up somewhere. https://twitter.com/dsquareddigest/status/140291428628503347... > again - who is on the CP desk at Tether? Who is their account manager at Goldman Sachs? Who do they talk to at, say, the GE corporate treasury? Commercial paper is a short term money market that has to be managed and rolled - you can't just buy and hold the bonds anonymously. Dan's argument…

[deleted]

Re: Tether starting to lose its peg too, after Terra did

#477

Post by jqpabc123 »

The sad reality is that many poorer and financially illeterate people have been tricked by VCs and other grifters ...

The sad reality is that many poorer and financially illiterate people have become partners with the grifters by preaching the crypto religion to anyone who would listen --- knowing that every new convert would likely do the same and help push their own crypto assets higher.

This is nothing new --- it is the same marketing scheme that religion has been using for centuries.

Re: Tether starting to lose its peg too, after Terra did

#478

Post by emteycz »

ptero wrote: post #463
hbbio wrote: post #396

Earlier quoted context omitted.

Mind that... it actually was a good idea. Until people started cheating with it, exactly as you say. Tokenized dollars allow to benefit from the tech (smart contracts), which is itself great and opens a lot of possibilities. What's not is: Ponzi schemes (Terra), crooks (Tether?). Edit: There are valid stablecoins like USDC (they hold sufficient reserves) and even valid algorithmic stablecoins e.g. LUSD, backed by Eth…

> There are valid stablecoins like USDC (they hold sufficient reserves) Those reserves are sufficient until they are not. There are always risks of losing the peg and anyone investing in them should be aware of and track the main ones. My 2c.

How is it any different from a bank?

(I live in a country with well done digital currency regulation that is comparable to what banks have to do - let's not limit this to the case of Tether only).

Re: Tether starting to lose its peg too, after Terra did

#479

Post by ekianjo »

FeepingCreature wrote: post #203
stevekemp wrote: post #186

Earlier quoted context omitted.

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…

A deflationary currency was never going to be viable as money.

there are still bitcoins being mined. where is it deflationary?

Re: Tether starting to lose its peg too, after Terra did

#480

Post by CPLX »

jmyeet wrote: post #455
shafyy wrote: post #55

Earlier quoted context omitted.

> If you've been honestly working on the assumption that it is, then you deserve to lose your (real) money to some crypto VCs on an island somewhere. The sad reality is that many poorer and financially illeterate people have been tricked by VCs and other grifters into this with billions of dollars spent in advertising. So, no, they don't deserve to lose their money to these assholes. These assholes need to be prosecu…

I actually hate people disavowing themselves of responsibility here. While there is definitely some shady stuff in Crypto (particularly NFTs, which seem to be 99% scams), there's a certain level of personal responsibility required here. People saw the meteoric rise of Bitcoin and got a serious case of FOMO. Everyone wanted to be on the next Bitcoin. This, ultimately, is the American Dream: to get rich by doing nothin…

Our society has made a different call. We have decided that without being restricted investment cons will cause massive harm to society. We decided this because it happened over and over and over and over again.
Post reply on HN