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Tether reserves backed by 2.9% cash

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Re: Tether reserves backed by 2.9% cash

#151

Post by dillondoyle »

pja wrote: post #27
dillondoyle wrote: post #17

This is an opinion piece and the headline & article are clickbait IMHO. From Tether's chart, they literally have 2.9% in cash. So I guess the headline technically checks out. But Tether reported over 75% held in cash equivalents, the same type of liquid assets Apple reports when reporters say Apple is sitting on billions in 'cash' I think maybe more interesting, Tether reports only 1.64% slice of pie has some crypto…

It’s not that long ago that Tether was claiming that all reserves were cash deposits. Now something like 75% of the reserves are loans to ... well, who knows? My guess is other crypto-companies, but it’s impossible to tell. (It’s also very weird to lump together “bonds” and “gold” in the same pot - these are completely different asset classes.) If one were of a cynical turn of mind (and who wouldn’t be, given Tether’…

Yeah I have no idea what the truth is. They aren't regulated it seems. But my point was this isn't a news report, it's labeled opinion. And reporting only on what Tether released I think the headline is clickbait and article lacks context of what marketable securities means.

Re: Tether reserves backed by 2.9% cash

#153

Post by jukabo »

airza wrote: post #145
woah wrote: post #127

Earlier quoted context omitted.

That sounds like a bank account. Are you criticizing USDC for not being as safe as paper dollars in a mattress?

Bank accounts are insured against counterparty risk by the FDIC.

Did you know that FDIC is only back by 2.5% cash.

Re: Tether reserves backed by 2.9% cash

#154

Post by grey-area »

jiofih wrote: post #129
Marazan wrote: post #119

Earlier quoted context omitted.

Yes, that is the scenario I am describing. I have a billion dollars of liabilities in the ScamStableCoins I issued and a billion dollar in "Assets" from the IOU I wrote myself. THus I am perfectly fully backed.

Yeah, technically correct I guess. Is there any realistic scenario where this would fly? This would be plain and clear fraud and not something allowed to go on for two years after multiple audits.

This is likely very similar to how USDT works.

So the answer to your question is it would happen in crypto where there is no regulator and people trust ‘audits’ which verify nothing.

Re: Tether reserves backed by 2.9% cash

#155

Post by Forbo »

initplus wrote: post #39
StavrosK wrote: post #2

Why print money when a private company can just create its own? Just imagine what's going to happen when there's a bank run on Tether.

Can't have a bankrun if you don't allow withdrawls. Tether will not actually redeem your USDT for USD.

This just seems like Mt. Gox 2.0 waiting to happen.

Re: Tether reserves backed by 2.9% cash

#156

Post by Forbo »

StavrosK wrote: post #5
thaumasiotes wrote: post #4

Earlier quoted context omitted.

Presumably, USDT would lose value. What then?

The entire cryptocurrency market would collapse and cryptocurrency would become usable again.

I anxiously await the next bear market crunch to flush out all the garbage that has gotten sucked in. It feels like 2017 all over again.

Re: Tether reserves backed by 2.9% cash

#157

Post by Marazan »

jiofih wrote: post #129
Marazan wrote: post #119

Earlier quoted context omitted.

Yes, that is the scenario I am describing. I have a billion dollars of liabilities in the ScamStableCoins I issued and a billion dollar in "Assets" from the IOU I wrote myself. THus I am perfectly fully backed.

Yeah, technically correct I guess. Is there any realistic scenario where this would fly? This would be plain and clear fraud and not something allowed to go on for two years after multiple audits.

The NYAG said they were liars who had comitted multiple acts of fraud and fined them.

There have been precisely 0 (zero, none) completed audits of Tether's holdings

Re: Tether reserves backed by 2.9% cash

#158

Post by Marazan »

dvh wrote: post #131
Marazan wrote: post #71

I run ScamStableCrypto. I create a billion ScamStableCoins and claim they are worth $1 each. I give a billion ScamStableCoins to ScamCryptoExchange. ScamCryptoExchange is run by me. ScamCryptoExchange writes an IOU for one billion US dollars and gives it ScamStableCrypto (my right hand gives something to my left hand). I, as ScamStableCrypto, write down in my balance book that I have a billion dollars of Commercial P…

Whitepaper?

I'll publish soon. I think my real invovation for ScamStableCoin is that I won't actually ever let anyone convert ScamStableCoin to USD. That way my lack of actual cash will never be exposed.

Re: Tether reserves backed by 2.9% cash

#159

Post by dkarras »

ryanlol wrote: post #146
dkarras wrote: post #33

Earlier quoted context omitted.

Doesn't matter what tether says because they are not audited. I could write "100% cash!" on a napkin and it would have the same credibility.

Not exactly, Tether has more credibility than your napkin given that they’re successfully maintaining the USDT peg despite huge volumes (for now)

Following that logic, any obvious ponzi / pyramid scheme is credible and trustworthy until it demonstrably collapses?

You say tether is "maintaining" the peg but that information comes... from them. They are not audited. They are unregulated. You don't even know who is behind it. You won't see that they are not even close to solvent until a bank run occurs. It is easy to suspend disbelief as long as nobody requests their fiat from tether in cash in large volumes. In those huge volumes, no fiat is changing hands, so they can very easily run with no cash at hand as long as people believe they have the money.

When I looked at it in more detail a few years ago, they even claimed you are not entitled to the fiat in exchange to the usdt you buy, is that still true? Is there even any way to get any fiat from them directly? Sure, you can convert your usdt to fiat using an exchange by buying another cryptocurrency first - in this chain everyone "believes" tether has the money to back it up and that's why it works. It could work even if tether had absolutely no usd because there is no reason to touch that usd.

Re: Tether reserves backed by 2.9% cash

#160

Post by CuriousCosmic »

matheusmoreira wrote: post #122
Marazan wrote: post #71

I run ScamStableCrypto. I create a billion ScamStableCoins and claim they are worth $1 each. I give a billion ScamStableCoins to ScamCryptoExchange. ScamCryptoExchange is run by me. ScamCryptoExchange writes an IOU for one billion US dollars and gives it ScamStableCrypto (my right hand gives something to my left hand). I, as ScamStableCrypto, write down in my balance book that I have a billion dollars of Commercial P…

I simply don't understand why all this complicated stable coin stuff is even necessary. Why can't exchanges use USD instead of USDT, USDC, BUSD or whatever? There are trading pairs for other currencies like EUR, GBP, AUD, BRL, RUB. Why can't we have USD trading pairs?

Stablecoins have value outside of just trading pairs on exchanges. The main value I find in them is that they allow you to reason about fiat(or really any other currency) on chain in a far simpler manner.

For example, suppose there's a smart contract based lending marketplace on the network. In most cases, real world users(lendees) will want said loan to be in the context of their local currency. As a lender you will want to provide said loan but you only have non-local currency assets.

Stablecoins allow you to represent the value of said loan on the network in a way that smart contracts can easily understand. Additionally, the lending marketplace could automatically handle the conversion between whatever X asset the lender has and the fiat stablecoin the lendee wants and vice-versa.

The main value add outside of convenience is that the current value of the loan is the same in the context of the local currency both at the day of signing and on the repayment date. Without working in the local currency, people could find themselves with a 50% more or less valuable loan the day after they sign it or the day before they repay it given current market volatility. Stablecoins and wrapped currencies bypass that issue.

This basic concept applies to any service marketplace where one side wants to use one currency and the other wants to use another. For fiat the solution is called a stablecoin but for incompatible cryptocurrencies the solution is called a "wrapped" currency.

Like others have mentioned there are regulatory advantages however they also greatly simplify a lot of things on the network for both sides of a transaction in various service marketplaces.

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