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Tether Discussion featuring Bennett Tomlin and George Noble

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Re: Tether Discussion featuring Bennett Tomlin and George Noble

#21

Post by kgin »

Bombthecat wrote: post #18

Personally, i dont see any difference between any coin and and "real world" currency. I dont mean the power behind it and stuff. But crypto basically left the gold standard itself a long time ago!

USD gets its value from the legal requirement that taxes are paid in USD. Anyone who lives or wants to do business in the United States has to have dollars. That sets a floor of demand that more demand can be built on.

Cryptos often have limited supply but have no floor on demand. For USD to go to zero, the United States as we know it would have to collapse. Most cryptos could go to zero with no real world change aside from people finding a different asset to speculate on.

Re: Tether Discussion featuring Bennett Tomlin and George Noble

#22

Post by leppr »

arcticbull wrote: post #15
qeternity wrote: post #12

Earlier quoted context omitted.

This stuff is so disingenuous from maxis. I get that you want someone to pump your bags. But the US Govt gets to print dollars. That’s how that works, for better or worse. Tether does not get to print dollars (which is what they are doing by claiming they are “fully backed”).

It’s an asinine take in at least three separate ways. First 1USDT should equal the value of 1USD, so any drop in value of the USD would also be a drop in USDT purchasing power. Second, 1USDT backed by less than 1USD in value is obviously worth less than 1USD no matter what happens to the USD. Third, the charter of the fed, created by congress, is to maintain a low fixed rate of inflation and maximal employment (along…

> Second, 1USDT backed by less than 1USD in value is obviously worth less than 1USD no matter what happens to the USD.

That's obviously not how it works. For instance, US banks have capital requirements of ~8%, but the dollars they issue aren't worth $0.08, they're worth a full dollar (as long as no bank run happens). The same mechanics hold for Tether, whether they're regulated or not.

In fact, USDTs are often worth more than a real dollar because the demand for them trumps their risk discount.

Re: Tether Discussion featuring Bennett Tomlin and George Noble

#23

Post by bluecalm »

arcticbull wrote: post #15
qeternity wrote: post #12

Earlier quoted context omitted.

This stuff is so disingenuous from maxis. I get that you want someone to pump your bags. But the US Govt gets to print dollars. That’s how that works, for better or worse. Tether does not get to print dollars (which is what they are doing by claiming they are “fully backed”).

It’s an asinine take in at least three separate ways. First 1USDT should equal the value of 1USD, so any drop in value of the USD would also be a drop in USDT purchasing power. Second, 1USDT backed by less than 1USD in value is obviously worth less than 1USD no matter what happens to the USD. Third, the charter of the fed, created by congress, is to maintain a low fixed rate of inflation and maximal employment (along…

Their clever trick is this: instead of making every USDT worth less than 1USD they made some of the USDT worth 1USD and the rest worth nothing. This plus relentless misinformation and shaming of the skeptics apparently makes it possible to keep up for a very long time.

Re: Tether Discussion featuring Bennett Tomlin and George Noble

#24

Post by wruza »

ur-whale wrote: post #20
arcticbull wrote: post #17

Earlier quoted context omitted.

That’s not really how the financial system works. Debt is an investment in the economy, like you taking out a loan to buy a pizza shop. If your pizza shop generates more revenue than cost to service your debt, then the fact you have the debt doesn’t really matter does it? After all your own a pizza shop too, right. On the US side, the system fails once the economy fails - and then we have much bigger problems. You’re…

Yes, and indeed, the USistan's long-term viability, like any human enterprise must be looked in terms of assets vs liabilities. And right now, the picture isn't exactly rosy, certainly not something I'd invest in. I'm no fan of Tether (as a matter of fact, I'm pretty certain it'll blow up in fairly short order. I am actually looking for a well constructed way to short it) I was simply point out how ridiculous the com…

picture isn't exactly rosy, certainly not something I'd invest in

From the pessimistic point of view that could be said about anything. But people around the world have little to no better options when it comes to the question “okay I finally have some credit, where do I put it into?”. It’s not rosy, but it is the least stinking pile of shit the world has.

Re: Tether Discussion featuring Bennett Tomlin and George Noble

#25

Post by [deleted] »

codetrotter wrote: post #5
speedybird wrote: post #2

I downloaded the mp3 to listen to this, but the audio is filled with weird squeaks, squawks, and short skips. I don't know if their microphone is broke, if this is some effects they added to be cute, or if their mp3 download is simply corrupted. Either way, it's intolerable. I couldn't listen to it for more than a minute.

The server reports that the MP3 file that you get from the download link is 79950993 bytes long, but the connection is closed for me after 79944810 bytes each time I try to download it. Perhaps this is the reason? The download link differs from the link that the embedded player is using for the file. Try downloading the file that the embedded player uses instead. Here's a link to said file: https://www.grant-williams…

[deleted]

Re: Tether Discussion featuring Bennett Tomlin and George Noble

#26

Post by cobookman »

Sometimes I wonder if this is how Michael Burry and others felt before the housing crash.

Right before the housing crash, most the in-industry folks were fully aware it was unsustainable, but they felt it would continue long term. Same goes for tether, majority of those involved in crypto know what they are doing, and the pump-up effect it's had to crypto.

Re: Tether Discussion featuring Bennett Tomlin and George Noble

#27

Post by saurik »

kgin wrote: post #21
Bombthecat wrote: post #18

Personally, i dont see any difference between any coin and and "real world" currency. I dont mean the power behind it and stuff. But crypto basically left the gold standard itself a long time ago!

USD gets its value from the legal requirement that taxes are paid in USD. Anyone who lives or wants to do business in the United States has to have dollars. That sets a floor of demand that more demand can be built on. Cryptos often have limited supply but have no floor on demand. For USD to go to zero, the United States as we know it would have to collapse. Most cryptos could go to zero with no real world change asi…

Crypto-currencies are selling you a service: linearizing database transactions. This is like arguing that Apple could arbitrarily go to zero because the world would find a different phone to use, and while that's true it seems to miss the point that Apple is unlikely to go to zero until after someone makes a better phone or makes phones obsolete. The world of decentralized database transactions--particularly the turing complete ones you get from systems like Ethereum--isn't some random speculative asset like artwork or baseball cards.

Re: Tether Discussion featuring Bennett Tomlin and George Noble

#28

Post by Bombthecat »

kgin wrote: post #21
Bombthecat wrote: post #18

Personally, i dont see any difference between any coin and and "real world" currency. I dont mean the power behind it and stuff. But crypto basically left the gold standard itself a long time ago!

USD gets its value from the legal requirement that taxes are paid in USD. Anyone who lives or wants to do business in the United States has to have dollars. That sets a floor of demand that more demand can be built on. Cryptos often have limited supply but have no floor on demand. For USD to go to zero, the United States as we know it would have to collapse. Most cryptos could go to zero with no real world change asi…

I know! What i meant, was, that crypto was made because the gold baking was gone. (one of the reasons and anonymity etc) now, we have tether beeing printed out of thin air and no one gives a shit :)

Re: Tether Discussion featuring Bennett Tomlin and George Noble

#29

Post by janandonly »

There are a few issues at play here:

1. A lot of newly 'minted' Tether's are being used to buy Bitcoin (so prop it up, the Bitcoin price rises).

2. Possibly as a next step, these now more valuable bitcoins are than sold for real money, and the owners of bitfinex/tether pocket this real earned money as profit.

3. It should be noted that although the total amount of tether is still rising, the total amount of all "stable coins" is rising a lot faster, so basically, outpacing the growth of tether: the market seems to be on to them, and puts more trust in other stable coins. Personally, I like Maker's DAO decentralised SAI stable coin a lot. But preferences vary.

4. Why is there any demand at all for any stable coin? Can't a person just send/receive real dollars/euros? Answer: No .

There are a lot of unbanked people in the world, more than we in our western minds would dare to guess, I think.

Look at El Salvador: in 6 weeks since officially adopting Bitcoin as a currency (next to the US dollar, not replacing it mind you) the number of people that now have "wallet" software running on their phone is already lager then the number of people who over the past 20 years were able to open a bank account.

Re: Tether Discussion featuring Bennett Tomlin and George Noble

#30

Post by qeternity »

leppr wrote: post #22
arcticbull wrote: post #15

Earlier quoted context omitted.

It’s an asinine take in at least three separate ways. First 1USDT should equal the value of 1USD, so any drop in value of the USD would also be a drop in USDT purchasing power. Second, 1USDT backed by less than 1USD in value is obviously worth less than 1USD no matter what happens to the USD. Third, the charter of the fed, created by congress, is to maintain a low fixed rate of inflation and maximal employment (along…

> Second, 1USDT backed by less than 1USD in value is obviously worth less than 1USD no matter what happens to the USD. That's obviously not how it works. For instance, US banks have capital requirements of ~8%, but the dollars they issue aren't worth $0.08, they're worth a full dollar (as long as no bank run happens). The same mechanics hold for Tether, whether they're regulated or not. In fact, USDTs are often worth…

Here is a perfect problem with crypto: people understand just enough tech or economics to be dangerous, and not enough to truly understand the system.

This is of course absolutely not how things work. The risk isn’t with the dollar holders in the banking scenario because a dollar isn’t backed - it doesn’t need to be backed. This is the essence of fiat currency.

The risk is with depositors (creditors), and as you say they do not value their deposits at 8 cents on the dollar just because that’s what capital reserve ratios are. We have tons of regulation and insurance and centuries of mistakes that have led to the current system. But your argument conflates one core thing: assets vs liabilities. The dollars that banks lend are real dollars, and the people who receive those dollars don’t care what the bank’s financial health is. That’s because the dollars they receive in a loan are liabilities, whereas when people receive Tether, it’s an asset. Let’s explore…

People don’t deposit dollars in banks, and receive a certificate of deposit and use that in lieu of dollars. This is what is happening with Tether. Tether doesn’t take USD deposits and turn around and issue USD loans, it takes USD deposits and issues USDT certificates of deposit, which the market trades at par with USD.

This difference is crucial though. Banks are fundamentally limited in the number of loans they can make versus the amount of deposits they hold. So they might be overlevered, but borrowers don’t worry about the dollars they receive being fake. And if the bank collapses, who cares, I’m a debtor, not a creditor. Reserve ratios matter to creditors, and don’t impact the legitimacy of any loans of they’ve made.

Tether on the other hand takes deposits and issues certificates of deposit that they call USDT and claim are redeemable for one USD. These then trade on the open market as fungible USD. The problem is that this makes USDT holders creditors, whereas in the bank example USD holders are debtors. So this means as a creditor the solvency of the issuing institution is of paramount importance. If Tether implodes, USDT are worthless, just like if a bank implodes, its certificates of deposit might be worthless (ignoring insurance). But in the bank scenario, the dollars that it loaned out aren’t worth any less.

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