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

Tether: The Story So Far

kalzumeus.com

Post reply on HN
Print view View original

141–150 of 241 posts

Re: Tether: The Story So Far

#141

Post by tptacek »

Geee wrote: post #138

Isn't it curious that he writes a lengthy post about frauds made possible with the current banking system (trust-based reserve) and then doesn't find any use for cryptocurrency? This is exactly the reason why Bitcoin was invented; its supply is mathematical and can't be over-inflated. Satoshi even included the criticism in the Bitcoin's Genesis block: "The Times 03/Jan/2009 Chancellor on brink of second bailout for b…

He was writing descriptively, not normatively. You think there should be other uses for cryptocurrency besides speculation; he's saying it is overwhelmingly used for speculation.

Re: Tether: The Story So Far

#142

Post by simonebrunozzi »

tptacek wrote: post #141
Geee wrote: post #138

Isn't it curious that he writes a lengthy post about frauds made possible with the current banking system (trust-based reserve) and then doesn't find any use for cryptocurrency? This is exactly the reason why Bitcoin was invented; its supply is mathematical and can't be over-inflated. Satoshi even included the criticism in the Bitcoin's Genesis block: "The Times 03/Jan/2009 Chancellor on brink of second bailout for b…

He was writing descriptively, not normatively. You think there should be other uses for cryptocurrency besides speculation; he's saying it is overwhelmingly used for speculation.

Agreed - also IMHO it's mostly used for speculation, and hopefully shouldn't be the case. Speculation can't last forever, but a few good use cases might.

Re: Tether: The Story So Far

#143

Post by dmitrygr »

arzt wrote: post #14

"Players in the crypto ecosystem will be shocked, shocked to know it got this bad, this quickly, but this has been an open secret for over a year." ---- I'm not entirely in agreement the crypto world will be shocked tether is insolvent. As long the the fiat gateways exist to exit the system with gains intact, most could care less about tether. It's musical chairs.

> As long the the fiat gateways exist to exit the system with gains intact

Basically the entire article points out that this is in fact impossible, only the first ones to run will be able to do this. Much like a bank run, there is not enough cash to back a tether exodus.

Re: Tether: The Story So Far

#144

Post by H8crilA »

YawningAngel wrote: post #105
rsync wrote: post #61

"Bitfinex claims to have believed, per their court filings, that CCC subsidized their services through net interest. ... "This would make sense for a financial institution, but it doesn’t make sense for a money launderer, because risk-free assets generate very little interest (1% of a billion dollars doesn’t pay for the minimum viable financial institution) ..." I find that interesting ... 1% of $1B is $10M ... and I…

Monzo and Starling are startup UK banks and I think both spent under $10M to get to the "minimum viable bank" state. With that said, money is not the problem here. If Bitfinex had wanted to start a 'narrow bank' just to hold Tether, they would have failed: 1. Because they would not have been given a license 2. Because existing financial institutions would have refused to deal with them, as happened to Noble. 3. Becau…

> 3. Because you cannot actually just park billions of dollars in the national reserve bank and collect interest on it.

Actually you can, it's called Interest On Excess Reserves (IOER) in the US, which has been the only short term rate enforcement mechanism of the FED since the crisis days. Till that whole repo thing happened, just recently.

https://en.wikipedia.org/wiki/Excess_reserves

The rest is true though.

Re: Tether: The Story So Far

#145

Post by mundo »

lacker wrote: post #106

I agree that the people behind Tether are fundamentally pretty sketchy, and it has a significant risk of collapse. However, Tether can't be totally ignored because as of right now, it's still the best tool for some things. The main value of Tether is that the BTC-Tether market is the most liquid cryptocurrency market. So if you want to exchange Bitcoin into dollars in an all-cryptocurrency transaction, you will proba…

> I think we would be better off if a different stablecoin with a more solid grounding was the most popular one.

I think you're missing the point of the article - the reason Tether is the most popular and cheapest is because it is junk behind the scenes.

You could start a competing one, which follows KYC laws like a real bank, but you'd have to charge higher fees (KYC is expensive) and turn away many customers (KYC is effective). But few users would use it; they would keep using the cheaper, more popular option, and they would justify it exactly the same way you did:

> But for now, since Tether is the most popular stablecoin and popularity itself provides value...

Re: Tether: The Story So Far

#146

Post by [deleted] »

simonebrunozzi wrote: post #142
tptacek wrote: post #141

Earlier quoted context omitted.

He was writing descriptively, not normatively. You think there should be other uses for cryptocurrency besides speculation; he's saying it is overwhelmingly used for speculation.

Agreed - also IMHO it's mostly used for speculation, and hopefully shouldn't be the case. Speculation can't last forever, but a few good use cases might.

[deleted]

Re: Tether: The Story So Far

#147

Post by _7fvc »

Tether problems are known. It's surprising that crypto sphere continues using it. I guess it's a good way to connect digital native Bitcoin to the rest of the world, aka, fiat.

I've been advocating for Bitflate. It's a cryptocurrency with constant inflation. The idea is to create a digital native and decentralized stablecoin. We won't get perfectly stable price. But it will not be controlled by a single entity. I think it is a better alternative than centralized stablecoins.

Re: Tether: The Story So Far

#148

Post by darawk »

api wrote: post #137
darawk wrote: post #135

Earlier quoted context omitted.

> "Markets can remain irrational longer than you can remain solvent." That is absolutely correct. However, an equally correct statement is: Whenever you think the market is being irrational, you just don't understand the situation well enough. So, if you think you can read some blog posts and determine that a freely trading financial market is being irrational...well, it's not the market that is irrational.

Your second point could only be true if markets were infinitely intelligent. https://arxiv.org/pdf/1002.2284.pdf

They're not infinitely intelligent. They're just almost always more intelligent than you (or me).

Re: Tether: The Story So Far

#149

Post by onlyrealcuzzo »

YawningAngel wrote: post #105
rsync wrote: post #61

"Bitfinex claims to have believed, per their court filings, that CCC subsidized their services through net interest. ... "This would make sense for a financial institution, but it doesn’t make sense for a money launderer, because risk-free assets generate very little interest (1% of a billion dollars doesn’t pay for the minimum viable financial institution) ..." I find that interesting ... 1% of $1B is $10M ... and I…

Monzo and Starling are startup UK banks and I think both spent under $10M to get to the "minimum viable bank" state. With that said, money is not the problem here. If Bitfinex had wanted to start a 'narrow bank' just to hold Tether, they would have failed: 1. Because they would not have been given a license 2. Because existing financial institutions would have refused to deal with them, as happened to Noble. 3. Becau…

What BitFinex is doing is literally illegal.

No bank on the planet (even Deutsche Bank) will have any direct/legitimate ties with BitFinex. No legitimate corporation will hold $4Bn in cash (if BitFinex even had it -- which they don't). Any illegitimate person you hand $4Bn to would just run off with it (which is what BitFinex did by now with any "real" cash given to them).

The founders of BitFinex have a long and lengthy history of fraud, posting online about how they plan to use their exchange illegally (for wash-trading), ripping off their customers, and also just being general scumbags.

People can take whatever opinion they want on Bitcoin. But Tether is 100% certifiably bullshit.

It's worth noting that shorting Crypto is pretty dangerous, so long as Tether is around. BitFinex can in theory (and almost certainly has in reality) minted billions of Tethers to inflate the value of Crypto assets. Ironically, the founder of BitFinex posted about the need for some reserve-bank (which Nakomoto famously harped about in the Bitcoin Genesis block).

Re: Tether: The Story So Far

#150

Post by mirekrusin »

simonebrunozzi wrote: post #142
tptacek wrote: post #141

Earlier quoted context omitted.

He was writing descriptively, not normatively. You think there should be other uses for cryptocurrency besides speculation; he's saying it is overwhelmingly used for speculation.

Agreed - also IMHO it's mostly used for speculation, and hopefully shouldn't be the case. Speculation can't last forever, but a few good use cases might.

Why can't it last? Casionos/betting seem to be doing well.
Post reply on HN