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

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

#731

Post by uniqueuid » Thu, May 12, 2022, 2:23 PM UTC

carlosdp wrote: post #726

This title is... wrong. It's entirely normal for stablecoins to fluctuate in minor ways like this [1], even USDC (which is literally backed by actual US dollars in a bank account) fluctuates +- 1 cent regularly. This is because these prices come from a variety of exchanges trading these currencies, with different supply pools. Arbitrage remediates this very quickly (Tether, at time of writing, is at $1.00). Not defen…

The very chart you linked shows a dramatic increase in volatility over the last days. That surely points to increased stress tether is under.

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

#732

Post by Danidada » Thu, May 12, 2022, 2:26 PM UTC

onlyrealcuzzo wrote: post #492

nailk wrote: post #445

Earlier quoted context omitted.

> the upside can be had by holding dollars Unless your bank kicks you out by some reason (incompetent compliance). Unless foreign bank refuses your transaction because the bank doesn’t like the color of your passport. Unless somehow banking system wants to cut extra from your transaction (2.5-4% for transaction) because of double currency conversion you didn’t ask for, because you didn’t specify correct correspondent…

> Unless your bank kicks you out by some reason (incompetent compliance). Unless foreign bank refuses your transaction because the bank doesn’t like the color of your passport. Unless somehow banking system wants to cut extra from your transaction (2.5-4% for transaction) because of double currency conversion you didn’t ask for, because you didn’t specify correct correspondent bank and your bank didn’t tell you about…

I disagree. As someone from Argentina which has a high percentage of crypto owners I can say poor people in poor countries aren't literate enough or don't have the resources (ie: liquidity, bank account) to get cryptos. It's more of a middle class thing here. Real estate isn't cheap in the big cities if you take into consideration the average salary and barely any financial aid to buy property. Besides, being a landlord isn't profitable enough given the initial investment because rental prices are heavily regulated. Also not good for reselling because price have been going down in the last years and it looks like it will keep going like that. Stocks options are heavily limited and also (obviously) regulated. A lot of people here are afraid to invest in stocks here anyway. with an estimated inflation rate of 60% people save money by buying dollar cash, crypto and classic bank instruments (fund investments and fixed term investments)

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

#733

Post by unityByFreedom » Thu, May 12, 2022, 2:28 PM UTC

fooyc wrote: post #618

criddell wrote: post #591

Earlier quoted context omitted.

> 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.

Oh neat, an asset that can only keep or lose value.

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

#734

Post by vmception » Thu, May 12, 2022, 2:29 PM UTC

epolanski wrote: post #281

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…

> billions of dollars spent in advertising Sunday I was watching Formula 1. Crypto.com Miami GP was the name of the event, starting straight full of crypto.com ads. Watching Inter vs Juventus Italian Cup final: crypto.com event sponsor, with Inter sponsoring Inter fan tokens. It's interesting how desperately crypto space needs $ and euros.

or you're just gullible enough to think crypto.com and Inter fan are "the crypto space".

pretty clutch on crypto.com's cringy part, to name themselves crypto dot com. its like they looked at all the people confusing any random bitcoin servicing company for "bitcoin" and was like "you know what would be better than arguing on hackernews about reality? just helping keep confusing them for fun and profit!"

one exchange, a highly lucrative one, bought a bunch of sports sponsorships, due to the fact that they already made a bunch of money, and then advertises itself, like every other company with vertically integrated ad space does.

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

#735

Post by davewritescode » Thu, May 12, 2022, 2:31 PM UTC

This demonstrates my biggest issue with the crypto ecosystem in general. We've combined financial complexity, technical complexity and a lack of regulation and created a fruitful environment for scammers and con-artists to run amok. 99%+ of crypto investors have little idea how the system works on a financial or technical level and it's one of the reasons I've personally avoided it.

I probably have reddit comments from years ago pinning Tether as a major risk to the entire bitcoin ecosystem. If you can't reliably move bitcoin to and from USD then Bitcoin's utility starts to rapidly approach 0.

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

#736

Post by whimsicalism » Thu, May 12, 2022, 2:32 PM UTC

stephen_g wrote: post #715

trompetenaccoun wrote: post #685

Earlier quoted context omitted.

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…

> Banks have to have assets backing 100% of deposits, or else they’re insolvent!

Yeah, by asset you mean "loan to other person", and that person will often deposit their loaned money in the same bank, where it will be loaned out again.

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

#737

Post by unityByFreedom » Thu, May 12, 2022, 2:32 PM UTC

Danidada wrote: post #722

aeyes wrote: post #575

Earlier quoted context omitted.

But the black market has black market exchange rates. You can probably get something a little more reasonable on the open crypto market.

it's pretty much the same. Black market and crypto market are arbitraged between them so the price of one isn't too different from the other

Ok but without crypto would black market rates rise? I gather that was the point.

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

#738

Post by renewiltord » Thu, May 12, 2022, 2:32 PM UTC

xur17 wrote: post #703

NavinF wrote: post #20

“Will Tether collapse by the end of 2022?”: https://www.metaculus.com/questions/9121/tether-to-collapse-... Community Prediction: 33% My Prediction: 50%

Would you be willing to make a bet (with money) based on those odds?

I’m in, too. $10k 1:1 payout. I think Tether won’t collapse by the end of 2022.

Happy to tie up the USD in escrow too.

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

#739

Post by lxgr » Thu, May 12, 2022, 2:33 PM UTC

whimsicalism wrote: post #700

capableweb wrote: post #689

Earlier quoted context omitted.

For the record, USDT was at its lowest point ~$0.91, sometime in April 2017, and seems to have recovered after that as well. I'd never touch USDT for other reasons (why not use Dai?), but I won't say it doesn't seem like the money printer will go on for just a bit more.

It's like people have never heard of Dai? I don't get it.

Isn't Dai crypto-backed? That would give it a risk profile, but also not make it risk-free: Counterparty risk (Tether) vs. exchange rate risk of the backing assets (Dai).

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

#740

Post by vmception » Thu, May 12, 2022, 2:33 PM UTC

davewritescode wrote: post #735

This demonstrates my biggest issue with the crypto ecosystem in general. We've combined financial complexity, technical complexity and a lack of regulation and created a fruitful environment for scammers and con-artists to run amok. 99%+ of crypto investors have little idea how the system works on a financial or technical level and it's one of the reasons I've personally avoided it. I probably have reddit comments fr…

> If you can't reliably move bitcoin to and from USD then Bitcoin's utility starts to rapidly approach 0.

But you can whether Tether exists or implodes or goes rogue or not. Take 5 minutes to understand why and come back with a better understanding of the crypto ecosystem? You're one of the 99%+ that you're referring to, that's just not trading.