USDT actually has a cash out mechanism directly with Tether (the company), right? If it is trading at 0.9935 (coinmarketcap showing this now), what's stopping people from buying 1 million USDT and selling back to the company to make a $6500 profit? Is moving it around very slow? Is the cash out mechanism limited to X per day or something?
Tether starting to lose its peg too, after Terra did
711–720 of 976 posts
Re: Tether starting to lose its peg too, after Terra did
#712Earlier quoted context omitted.
From wikipedia [0]: "The American Dream is a national ethos of the United States, the set of ideals (democracy, rights, liberty, opportunity and equality) in which freedom includes the opportunity for prosperity and success, as well as an upward social mobility for the family and children, achieved through hard work in a society with few barriers." [0]: https://en.wikipedia.org/wiki/American_Dream
I suppose I'm wondering if the definition of "hard work" has shifted. In the '50s and '60s was "hard work" like 60 hour weeks and "hustle economy" type of stuff? or was it just "doing a good job" 40 hours a week?
I’d say it was more “an honest day’s work for an honest day’s pay”.
Re: Tether starting to lose its peg too, after Terra did
#713Earlier quoted context omitted.
The problem with Tether is that for all we know, it could be completely unbacked and therefore worthless.
Well not completely, in the sense that they seem to be exchanging USDT for USD at a 1:1 ratio if you show up with 100k or more. There have been no reports of people that tried to get that and didn't get it. On the other hand maybe people holding a lot of USDT wouldn't not want to tell anyone else if they were unable to redeem it before they had sold it all on the exchanges...
> There have been no reports of people that tried to get that and didn't get it.
Have there been reports of people using the exchange successfully?
Re: Tether starting to lose its peg too, after Terra did
#714The speculation in this thread is silly. While Tether is certainly opaque (you could say shady), it's incredibly doubtful that it's unbacked to a significant extent. Even if it's only backed at 50% (which would be really shocking to me), it would take 39B$ to flow through the system to actually cause a depeg. That's very unlikely, and just the logistics of it means it would leave a lot of time to Tether to clear the…
> Even if it's only backed at 50% (which would be really shocking to me)
Why would that be shocking? It seems clear to me that they are full of shit.
Maybe it's 80% or 8% or basically 0% . Who knows..
Re: Tether starting to lose its peg too, after Terra did
#715The 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…
Yep, this fractional reserve scheme they're running sounds shady. Almost like what banks are doing when they create book money out of nothing. Which is of course perfectly legal if you're rich enough to set up a private bank but the difference is they're doing it on a public ledger where everyone can see exactly how much emission there is, while bank books aren't public. Doing it in the open clearly goes too far, the…
That’s actually a bit of a misunderstanding of how banks work. “Fractional reserve” isn’t really actually a thing in the real world (just a textbook model). The confusion stems from a rule in the US, where banks were required to have a particular type of asset (central bank reserves) in an amount equaling at least 10% of deposits. People misunderstood this to mean that banks only have 10% of deposits backed with any asset, which is completely wrong! Banks have to have assets backing 100% of deposits, or else they’re insolvent! The reserve requirement was a liquidity thing, and I don’t think it’s actually a requirement at all any more. Most other countries don’t have a reserve requirement either.
Now, it is basically correct that banks create money (when they lend, because the created loan (debt to the customer) is an asset to the bank, and at the same time they create a liability (to the bank) that is the deposit (the money loaned)), as you can read about here [1] from the Bank of England. But that’s not a secret, it’s just not commonly known.
What Tether is doing, of course, is different, because they seem to create money out of nothing without having the assets to cover them, and/or without the licensing to create assets (loans), which of course carries with it obligations like capital adequacy requirements to be able to cover expected losses with capital (not deposits, a real bank isn’t actually allowed to use customer deposits for lending, but they are used as part of the liquidity that the bank needs).
1. https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
Re: Tether starting to lose its peg too, after Terra did
#716Earlier 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…
> People saw the meteoric rise of Bitcoin and got a serious case of FOMO.
Something about the chance of life changing returns in intoxicating. Personally I'd be thrilled with a 20% annual return in "normal" investments, but somehow crypto doubling or even tripling in a year is boring because we're all after the 100x+ return. Maybe it's because psychologically it just feels like more of a lottery ticket.
I have a relative in wealth management and went through a period where clients asked about bitcoin frequently. He told me his rule of thumb is: "If you've heard of it, it's probably already too late."
Re: Tether starting to lose its peg too, after Terra did
#717Earlier quoted context omitted.
I think Tether can get away with less than 100% collateralization. At the current market cap of 82bn, even if they are only 20% collateralized, it takes 16.4bn one way movement to deplete their reserve. Is that likely event? Guess it depends, but I think market makers would be more willing to backstop them than UST shitshow. UST has "death spiral" structure that makes MMs less willing to backstop them once it goes on…
The sharks still smell blood in the water. If there's money to be made on the other side, the other side will be able to get all the capital it needs.
A lot of people have looked for conspiracy or motivation around the Terra Luna crash, but the real answer is if you can legally make money by making something crash, then someone will make it crash.
Terra Luna was a slow antelope on the savanna.
Re: Tether starting to lose its peg too, after Terra did
#718The 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…
Yep, this fractional reserve scheme they're running sounds shady. Almost like what banks are doing when they create book money out of nothing. Which is of course perfectly legal if you're rich enough to set up a private bank but the difference is they're doing it on a public ledger where everyone can see exactly how much emission there is, while bank books aren't public. Doing it in the open clearly goes too far, the…
[deleted]
Re: Tether starting to lose its peg too, after Terra did
#719Earlier quoted context omitted.
"Deserves" is a word with variable meanings. You learn early on not to touch hot stoves. Do you morally deserve to get burned if you touch the stove anyway? Arguably no, but in the other meaning of "you should've known better", you kinda do deserve it.
There's a very natural feedback mechanism to a hot stove. When former world leaders are turning up and crypto conferences and the industry remains largely unregulated, then can you really blame people for investing?
> can you really blame people for investing?
Not if it was investing. But they are not investing. Investing requires restraint, calculated risk-taking, and understanding of what it is exactly that you're buying.
"yolo all in on Terra" is not investing. It's gambling.
Would you feel sorry for someone who put his entire monthly salary on a single spin of a slot machine? I certainly wouldn't.
Re: Tether starting to lose its peg too, after Terra did
#720The 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…
If it is 20% backed, haven't they pocketed the other 80bill already anyway? Therefore the 20B left is just a lottery ticket you might as well pay to have a chance to klept some more hundreds of bills?
What am I missing here? That the 80 bill has been badly spent on papering over some exchange losses?