If you haven't been following along, here's why this matters: Tethers is a sole-source cryptocurrency, pegged to the US dollar. Bitfinex produces it, though they're cagey (some would say outright lying at times) about the level of involvement. The primary purpose of tethers is money laundering, even more so than cryptocurrency generally. Bitfinex was cut off from the US financial system, which makes it impossible for…
Why are you singling out Bitcoin though? All cryptocurrencies are affected by this.
...except that Tether long predates Bitfinex's wire issues. They're usable on many of the major exchanges (Bittrex, Poloniex, for example). Tether was explicitly created for the purpose of equalizing prices across exchanges. It's indeed possible that they're insolvent, but there is no real evidence of that, just lots of people speculating incessantly without much justification. Basically everything about the parent c…
> without much justification. Well, they've never proved it. Just a literal: "Hey, we promise we have the money." So, can't really say; it's basically a Schrödinger's cat to everyone on the outside. We will only know when it booms — or busts.
You're absolutely right. I'm not saying they're solvent. There just isn't any evidence that they aren't.
...except that Tether long predates Bitfinex's wire issues. They're usable on many of the major exchanges (Bittrex, Poloniex, for example). Tether was explicitly created for the purpose of equalizing prices across exchanges. It's indeed possible that they're insolvent, but there is no real evidence of that, just lots of people speculating incessantly without much justification. Basically everything about the parent c…
Just because tether predates the big USD wire problems does not mean it's creation was unrelated. One of the biggest risk any exchange has is compliance, specifically with the US regulators (and banks). Even if BFX did not know this before they build their exchange, this most likely became clear from day 1. Tether is a great hedge against this (politics aside). Could you address anything that you think is "factually…
The post I was responding to claimed Tether was specifically created to address Bitfinex's wire issues. That is false. It may be that they created it to address theoretical, speculative wire issues that they might someday encounter in the future, but there is no evidence to support that hypothesis. Secondly, there is plenty of reason to create something like Tether independently of any wire issues (specifically: to normalize prices between exchanges).
Who gave them all that USD? Where are they keeping it? They've been shunned by their US banking partners. They've basically been printing Tethers 50m at a time. The only thing they've released which attempted to show that they actually had the USD was something they called an "audit" which explicitly said "this is not an audit" [0] on the second page. When you go to withdraw from Tethers it basically says "if you don…
I’m still wrapping my bed around the concept of Tethers, but I don’t see [1] as problematic. That’s the same way that ETFs work — they ensure value parity by guaranteeing that you can redeem blocks of them for the corresponding assets. But to ensure the ETF shares aren’t all redeemed this way, they limit it to large blocks of shares. That way, smaller investors can still sell their (smaller blocks of) ETF shares for…
I agree it's not problematic by itself, but together with the other allegations (including plenty I haven't listed) and it starts to paint a picture that they do not have USD to back up every single one of their Tethers.
I released a paper earlier this year talking about how we can reasonably lock cryptocurrency to fiat, but unfortunately the space is still rather immature. A single provider of USD tokens is extremely dangerous. Best case scenario would be if there were many companies like Tether and you could spread your token purchases between them automatically to minimize counterparty risk. Stellar and Ripple are closest to solvi…
Ripple is a scam and Jed McCaleb has been dumping thousands of Ripples a day since forever. You shouldn't encourage new users to buy Ripples.
Oh this is great news for Bitcoin If the price of Bitcoin has been inflated by 600 million USD that doesn't really exist, then when this unwinds it will be bad news for Bitcoin.
Oh this is great news for Bitcoin If the price of Bitcoin has been inflated by 600 million USD that doesn't really exist, then when this unwinds it will be bad news for Bitcoin.
that's about 0.6% of the market cap of bitcoin
You can't compare money and market cap directly. Millions of dollars can move the market cap by billions. It's because the books on exchanges are relatively thin.
This is incredible. How many times have cryptocurrency evangelists railed against phony fiat currency, only to be perfectly fine with an abstracted token that is backed by either fiat currency or nothing.
To be fair a lot of us stay away from these Tethers. I think there is a place for a 1:1 backed currency on the blockchain, but I'd rather see Governments actually print for example USD and AUD onto something like an ERC20 Ethereum token. This would add real fiat to the blockchain which is important, as in the end all taxes are paid in fiat. (It would be nice to be able to go directly into AUD for all crypto currencie…
> To be fair a lot of us stay away from these Tethers.
Especially after the Bitfinex "hack". I won't touch them with a ten-foot pole, but for large scale money laundering, nothing fits the bill better.
Oh this is great news for Bitcoin If the price of Bitcoin has been inflated by 600 million USD that doesn't really exist, then when this unwinds it will be bad news for Bitcoin.
that's about 0.6% of the market cap of bitcoin
Price is set by marginal transactions, not the amount of money converted over time.
Twitter account @Bitfinexed [1] has been calling out Tether and Bitfinex for possible fraud for a while. Time for popcorn, see how this plays out. [1]: https://twitter.com/Bitfinexed