Tether starting to lose its peg too, after Terra did • Hacker News Board

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

#611

Post by ilikehurdles » Thu, May 12, 2022, 1:03 PM UTC

matwood wrote: post #518

namdnay wrote: post #109

Earlier quoted context omitted.

it's much easier to con a greedy person. And you had to be very greedy indeed to convince yourself that 20% interest is a safe investment

> And you had to be very greedy indeed to convince yourself that 20% interest is a safe investment I think there is more nuance that this. People have been burned by many 'safe' investments over the years (housing, stocks) that they incorrectly view the risk profile as similar so look for higher returns. Much has been written on how we under appreciate actual risk, especially in 'safe' investments. There's also some…

These are all logical fallacies that are (and have been for ages) conventionally bad patterns to follow in a casino, let alone with life savings.

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

#612

Post by spywaregorilla » Thu, May 12, 2022, 1:04 PM UTC

Traster wrote: post #558

The thing that I think some people miss about Tether is that it's not about whether it is backed enough it's either fully backed or it isn't. If it's not, it's not a question of whether it's back enough to weather this storm, it's about whether the people running it think they can weather this storm. If they think they can keep it running they'll sell whatever backing they have and keep the peg. But if they even thin…

Amusingly anyone who does know the backing amount has an incredible opportunity to profit off of a decision to flee too

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

#613

Post by Sylveste » Thu, May 12, 2022, 1:05 PM UTC

vkou wrote: post #469

sgt101 wrote: post #416

Earlier quoted context omitted.

The thing is that someone will know, if someone does know what the level of backing is then they can figure out what the point of collapse would be and that will allow the construction of a scheme to make it collapse. If they can do that then there is a bunch of money to be made.

> If they can do that then there is a bunch of money to be made. Hoping to make money by betting on Tether collapsing is like taking out insurance against the event of a combined global thermonuclear war & genocidal alien invasion of the Earth. If you win the bet, you won't have anyone to collect from.

>If you win the bet, you won't have anyone to collect from.

They have $78B of assets, not $78T. It wouldn't rival even the smallest of national defaults. Heavy rhetoric but a bit OTT don't you think?

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

#614

Post by Sylveste » Thu, May 12, 2022, 1:06 PM UTC

tomjakubowski wrote: post #562

vkou wrote: post #469

Earlier quoted context omitted.

> If they can do that then there is a bunch of money to be made. Hoping to make money by betting on Tether collapsing is like taking out insurance against the event of a combined global thermonuclear war & genocidal alien invasion of the Earth. If you win the bet, you won't have anyone to collect from.

You could make money off Tether's collapse if you shorted it the simple way (and managed to time it very well) - borrow units of Tether from someone, sell them at $1 (ka-ching) later purchase the same quantity Tether at $0.00001 and return them to your lender for a tidy profit. I suppose if Tether collapsed to the extent that it was impossible to trade it at all, you'd have a hard time buying the worthless Tether bac…

>Or maybe the better analogue is, how do you fulfill your end of the deal as a short seller and return the shares owed to your counterparty if the company disbands in the meantime?

If you're short a company and the company goes properly bankrupt then the shares are literally worthless paper, you just throw them away.

I've been in this situation with interactive brokers and the position just disappears. (You get the profit as though you closed the position at a price of zero.) Shares of something that doesn't exist similarly don't exist. They just vanish.

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

#615

Post by SamBam » Thu, May 12, 2022, 1:08 PM UTC

reedlaw wrote: post #490

alexb_ wrote: post #386

The entire concept of a "stablecoin" reminds me a lot of something from SIGBOVIK 2014. Keep in mind, this was written in 2014, before any stablecoins actually existed, and that SIGBOVIK is supposed to be a joke conference where people present extremely silly ideas as if they were real breakthroughs. > DollarCoin: We propose skipping the middleman and providing direct proof-of-dollar with a blockchain that consists of…

Burning US $1 notes could not provide backing for minted coins. A better analogy is currency backed with gold without enough in reserve to handle a run on the bank.

How does burning over 100 MWh of electricity provide backing for a minted coin, yet directly burning currency doesn't?

What's the difference, besides the pollution?

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

#616

Post by t0mas88 » Thu, May 12, 2022, 1:08 PM UTC

id wrote: post #604

Traster wrote: post #558

The thing that I think some people miss about Tether is that it's not about whether it is backed enough it's either fully backed or it isn't. If it's not, it's not a question of whether it's back enough to weather this storm, it's about whether the people running it think they can weather this storm. If they think they can keep it running they'll sell whatever backing they have and keep the peg. But if they even thin…

The problem with Tether is that for all we know, it could be completely unbacked and therefore worthless.

Well not completely, in the sense that they seem to be exchanging USDT for USD at a 1:1 ratio if you show up with 100k or more. There have been no reports of people that tried to get that and didn't get it.

On the other hand maybe people holding a lot of USDT wouldn't not want to tell anyone else if they were unable to redeem it before they had sold it all on the exchanges...

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

#617

Post by hbbio » Thu, May 12, 2022, 1:09 PM UTC

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.

Unless the auditors (Grant Thornton, a reputable large company) are lying, they have 1:1

https://www.centre.io/hubfs/PDF/2022%20Circle%20Examination%...

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

#618

Post by fooyc » Thu, May 12, 2022, 1:10 PM UTC

criddell wrote: post #591

fooyc wrote: post #489

Earlier quoted context omitted.

My understanding is that people don't invest in stable coins (like you don't invest in USD when you have USD on your brokerage account). Stable coins can be exchanged against other crypto currencies on chain. So if you are willing to trade crypto currencies, stable coins are more practical than USD. There are also tax implications: Depending on where you live, crypto-to-crypto profits are not taxable. You will be tax…

> You will be taxed if you sell crypto currencies for USD, but not if you sell crypto currencies for a stable coin. Does that also mean if a stable coin fails you can't write off losses?

If you sell stable coins for USD and make a loss, you can write it off.

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

#619

Post by salawat » Thu, May 12, 2022, 1:11 PM UTC

jmyeet wrote: post #589

Mvandenbergh wrote: post #472

Earlier quoted context omitted.

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 extensi…

> First, I have never actually seen any comments here disavowing themselves of responsibility. Pulling from the comment I was replying to: > ... many poorer and financially illeterate people have been tricked ... That's quite literally disavowing responsibility. > ... but there is an extensive body of law intended to protect people from outright falsehoods This is true and the law hasn't quite caught up to crypto sca…

>I 100% agree and this is something that libertarians and anarchists gloss over completely.

I assure you, libertarians and anarchists, or at least the ones who have actually bothered to go beyond the surface, are not unaware of this. You're wielding those monikers as if anyone to bear them would be a fool by definition. It is clear low trust has adverse effects on growth. What is not clear is that unbounded rapid growth is a desirable state of affairs, or that an equilibrium is so important everyone must bow before a central authority/planner with a hand on a brake.

There is nuance your comment as written completely neglects.

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

#620

Post by woodruffw » Thu, May 12, 2022, 1:12 PM UTC

shafyy wrote: post #55

adhesive_wombat wrote: post #30

The fact that they've been minting billions of tether without collateral should make it abundantly obvious that this isn't a stablecoin and never had been. Anyone can pretend to have a peg in the good times, that doesn't mean there's really a peg or that the peg will remain in bad times. And if you can't count on the peg in bad times, it's not a stablecoin. If you've been honestly working on the assumption that it is…

> 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…

There are individual investors who were misled by institutions and grifters. There are also individual investors on this very forum who laughed, taunted, and turned their noses up whenever someone pointed out the fraudulent nature of the entire ecosystem.

The latter are not financially illiterate; they just thought (incorrectly) that they could time the scam better than the other little guys. I have correspondingly less sympathy for them.