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Tether Withdrawals Top $10B

cnbc.com

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Re: Tether Withdrawals Top $10B

#171

Post by Geee »

AlexandrB wrote: post #155
jules-jules wrote: post #147

Earlier quoted context omitted.

I'd be careful about adding Stasis to this list. Discord users have been complaining about not being able to withdraw through their platform for some time now.

This is what get's me when people say "do your research" in crypto. Where am I supposed to do that? Do I need to trawl Discord until I'm satisfied a coin is on the up-and-up? Is the absence of complaints like this for a crypto project evidence of quality or evidence of vigorous moderation?

Dyor means that they know it's a scam, but they want to avoid responsibility.

Re: Tether Withdrawals Top $10B

#172

Post by jakelazaroff »

lupire wrote: post #160
droopyEyelids wrote: post #159

Earlier quoted context omitted.

Someone buys $10 tethers for $10 worth of bitcoin, then bitcoin loses value, then the original buyer wants to redeem 10 tether for $10 USD.

That's no problem at all. The person who bought the Bitcoin / sold the Tether loses , but that doesn't affect USDT.

The person who bought the Bitcoin and sold the USDT is the Tether organization itself.

Here’s the same example, stated more explicitly:

1. I buy 10 USDT from Tether in exchange for $10 worth of Bitcoin. Tether now has 1:1 reserves of Bitcoin backing USDT.

2. The price of Bitcoin decreases by 50%. Tether no longer has enough reserves to cover all the USDT in circulation.

3. I want to sell my 10 USDT back to Tether and get my $10 worth of Bitcoin. But Tether only has $5 worth of Bitcoin in its reserves! USDT will lose its peg.

Re: Tether Withdrawals Top $10B

#173

Post by aftbit »

AlexandrB wrote: post #155
jules-jules wrote: post #147

Earlier quoted context omitted.

I'd be careful about adding Stasis to this list. Discord users have been complaining about not being able to withdraw through their platform for some time now.

This is what get's me when people say "do your research" in crypto. Where am I supposed to do that? Do I need to trawl Discord until I'm satisfied a coin is on the up-and-up? Is the absence of complaints like this for a crypto project evidence of quality or evidence of vigorous moderation?

Yes, IMO you should treat a crypto investment as requiring much more DD than a typical investment. You should have a thesis about why a given project is more likely than baseline to succeed, and you should have done enough research in the actual community of users (not just investor shills) to convince yourself that real people are actually using this thing reliably. There is just too much vaporware and outright scams to do otherwise.

Re: Tether Withdrawals Top $10B

#174

Post by jerf »

hbosch wrote: post #161
ineptech wrote: post #154

Someone help me understand this. All you need for a stable stablecoin is to save every dollar put in to it. The people behind Tether sell tethers for $1, they save all of those dollars, and whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1. As long as they never spend anything from the reserve, this can't fail no matter how unpopular the currency is - they can back the cu…

In theory, you're correct. If 1B USDT is backed up, 1 to 1, with exactly 1B USD and no one every moves, sells, invests, or otherwise trades the underlying USD then the coin is actually stable... but it's already been established that Tether is backed by assets other than USD[0]. So... how much are you willing to trust them? 0. https://www.cnbc.com/2021/02/23/tether-bitfinex-reach-settle...

And look at the incentives of all the individual parties in such a scenario.

I think this is the only way a "stablecoin" can function as designed... but it is not possible to construct an entity that has any scalable incentive to provide the backing that would create such a coin. For that entity, it is nothing but downside.

Therefore, stable coins are a fiction on par with perpetual motion machines. In the short term there's all sorts of perpetual motion and over unity machines... in the long term, not so much.

Re: Tether Withdrawals Top $10B

#175

Post by MockObject »

ineptech wrote: post #154

Someone help me understand this. All you need for a stable stablecoin is to save every dollar put in to it. The people behind Tether sell tethers for $1, they save all of those dollars, and whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1. As long as they never spend anything from the reserve, this can't fail no matter how unpopular the currency is - they can back the cu…

> whenever the price of Tethers drops to $0.99

If the Tether is pegged to the USD, who would ever sell one for $0.99?

Re: Tether Withdrawals Top $10B

#176

Post by SilasX »

hbosch wrote: post #161
ineptech wrote: post #154

Someone help me understand this. All you need for a stable stablecoin is to save every dollar put in to it. The people behind Tether sell tethers for $1, they save all of those dollars, and whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1. As long as they never spend anything from the reserve, this can't fail no matter how unpopular the currency is - they can back the cu…

In theory, you're correct. If 1B USDT is backed up, 1 to 1, with exactly 1B USD and no one every moves, sells, invests, or otherwise trades the underlying USD then the coin is actually stable... but it's already been established that Tether is backed by assets other than USD[0]. So... how much are you willing to trust them? 0. https://www.cnbc.com/2021/02/23/tether-bitfinex-reach-settle...

Even backing by other assets isn’t a big deal as long as they’re liquid assets or the interest they’ve been earning is enough of a buffer for the difference.

It’s like panicking because you’re because your bank only has $30k cash onsite, or your money market fund is only 3% cash.

Disclaimer: I’m still slightly short Tether, just think this a bad reason to be. Search my history for the details.

Re: Tether Withdrawals Top $10B

#177

Post by bko »

ineptech wrote: post #154

Someone help me understand this. All you need for a stable stablecoin is to save every dollar put in to it. The people behind Tether sell tethers for $1, they save all of those dollars, and whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1. As long as they never spend anything from the reserve, this can't fail no matter how unpopular the currency is - they can back the cu…

Its not entirely obvious what they "should" do with the fiat they make selling their token. They could invest it something safe like treasuries and keep the interest for themselves. But even treasuries could go down in value and if there are enough withdrawls they'll have to sell it at a loss.

Or they can invest in money market funds, or similar short term investments. Or commercial paper (unsecured short term debt). From what I read, they invested a lot in commercial paper to Chinese companies. It's all a game to eek out a slightly higher yield.

They face the same problem as any bank. Except banks have a regulatory framework that tells them exactly how much they can invest and in what, and every decade or so the bank gets bailed out.

Re: Tether Withdrawals Top $10B

#178

Post by everfree »

parkingrift wrote: post #138
louloulou wrote: post #75

Quoted post unavailable.

There is no way to short Tether from outside the crypto ecosystem. Shorting Tether with another stable coin is a fools errand.

> Shorting Tether with another stable coin is a fools errand.

Why? There are plenty of US-based, regulated and audited stablecoins out there. You could use them as collateral to short Tether.

Re: Tether Withdrawals Top $10B

#179

Post by carrja99 »

po wrote: post #46
stingraycharles wrote: post #28

Am I correct that it’s not necessarily $10B in withdrawals, as it is that the total market cap (valuation * total coins) dropped by $10B? Seems like an important distinction?

All the people responding to you are missing the distinction too... They can create/destroy coins at will. They say that they only do this when customers receive/withdraw fiat but we all know that's not the case and they aren't truthful about it.

EXACTLY. What people miss the point about tether is that they can claim anything, at the end of the day there’s no transparency to what is really going on behind the curtain. And keep in mind US citizens cannot legally redeem tethers for USD either.

Re: Tether Withdrawals Top $10B

#180

Post by Geee »

ineptech wrote: post #154

Someone help me understand this. All you need for a stable stablecoin is to save every dollar put in to it. The people behind Tether sell tethers for $1, they save all of those dollars, and whenever the price of Tethers drops to $0.99, they buy tethers until the price is back up to $1. As long as they never spend anything from the reserve, this can't fail no matter how unpopular the currency is - they can back the cu…

The problem is that it's not that simple to just park $80b on a bank account. The bank will use the money to buy bonds or give it out in mortgages to get interest on it. It's akin to kicking the can to the bank, and getting the money out might fail or be too slow. It's probably better to manage the reserve yourself, to be able to manage risk and liquidity properly, rather than outsource it to a bank.
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