Basically Tether does what banks did in 19th century - printing their own dollars. It worked for banks back then because of gold reserve. Without enough gold ( or dollar in case of Tether) reserve we have an opening scene of Cryptonomicon in the near future.
An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange
281–290 of 359 posts
Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange
#282Earlier quoted context omitted.
Can anyone explain how this "arbitraged feedback loop" allegedly works? Arbitrage causes prices to converge, not spiral up or down.
Tether artificially inflates the price of tether to $1. It's "tethered"
The claim is this phenomenon exists even without printing unbacked tethers.
> Even IF Tether is NOT running a fraud
Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange
#283Earlier quoted context omitted.
Housing prices didn't crash after many years of vastly disproportionate negative sentiment. Housing prices crashed after most of the negative voices capitulated and bought into the speculative fervor, until there were no more buyers. Today, nearly everyone's gut instinct is that cryptocurrencies are scams, frauds, bubbles, Ponzis and tulips. Popular sentiment has been negative for years. How will this thing unravel b…
Actually, housing crashed when lots of people who had bought housing on credit turned out to be unable to service the debt. I don't think there's a similar scenario with bitcoin. On the other hand, a large secular demand will always exist for housing. The same is not true for bitcoin.
I think there is always a demand to instantly transmit value across any distance or borders, which cryptocurrencies do very well as long as they have any value at all.
Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange
#284When something doesn't make sense, usually it's because information is missing. Every market participant knows that Tether doesn't prove their reserves, and yet the market exchange rate to USD stays in a tight band between 0.98 and 1.02 across multiple exchanges. If the market doesn't trust Tether, then it should trade at a deep discount to USD, not at parity. Similarly, the conventional wisdom says cryptocurrencies…
Tether is how you short bitcoin -- it's hard to move USD out of exchanges, people are worried about a bitcoin (or "all cryptocurrencies") drop, so they move into tether hoping to buy back in after bitcoin goes down without having to do the expensive/difficult bitcoin-usd move. This assumes that the price of bitcoin will go down but the rest of the system (exchanges, tether, mining, etc.) will stay intact. As long as…
I am not sure I follow you on people being worried about a BTC drop from their own selling of BTC. We are in a bull market; one person selling BTC for USD on an exchange is not going to have a significant impact.
"so they move into tether hoping to buy back in after bitcoin goes down without having to do the expensive/difficult bitcoin-usd move."
How does this help them avoid an expensive bitcion-usd move? They will still have to buy btc with tether and then do a transaction for USD incurring blockchain fees.
Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange
#285This is off topic but since a lot of people seem to be experts I just wanted to ask. Can someone explain this to me http://000fff.org/uploads/bitcoinprice.png The flat-lines. I have seen it several times. Is is because of lack of data of trading or lack of trading or what's making the price flatline like that?
It's due to large order volume at those prices. If an unusually large limit order or group of limit orders is placed at $11,800, then incoming market orders can chip away at the remaining volume available at that price but not move the externally visible price.
Thanks
Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange
#286Earlier quoted context omitted.
> If traders lose faith in Tether, they would sell Tether and buy Bitcoin in a flight to safety. Bitcoin prices would rise as traders try to get out of Tether. That might be the outcome, however: - If there would be the slightest bit of panic btc transactions would be congested for days. - If people would loose money by Tether their btc margin positions would be getting closed. - Because they loose faith in one crypt…
If Tether is garbage, the only way to get your money out is by converting Tether to something worth real money. We saw this in Mt. Gox. When USD withdrawals failed and people suspected Mt. Gox was insolvent, the only way to get money out was to buy BTC and withdraw that. The Mt. Gox exchange rate inflated because everyone knew dollar balances on Mt. Gox were worthless. If Bitfinex is insolvent and Tether fails, we'll…
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Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange
#287Why would anyone buy more new tethers @ $1 when they're selling for less than $1 at Kraken?
Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange
#288Earlier quoted context omitted.
The exchange doesn't sell/buy. It just connects the buyers/sellers. There are brokers that do that but you can't call them an exchange. I also think regulation prevent exchanges from trading on their own exchange to avoid front-running and since they have lots of information about the users/deposits/etc...
From coinbase TOS: You acknowledge that the quoted Buy Price Conversion Rate may not be the same as the Sell Price Conversion Rate at any given time, and that Coinbase may add a margin or “spread” to the quoted Conversion Rate.
I like how they say "may add"... haha, they always add it! I assume they're talking about the GDAX order book but if you watch the live coinbase price data on tradingview.com and try to buy bitcoin on casebase at the exact same time, it's always a little higher on coinbase.com (about 0.5% higher from my experience). I wouldn't mind if they weren't also charging an additional ~4% fee on top of that.
Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange
#289>every tether is always backed 1-to-1 by traditional currency held in our reserves
>There is no contractual right or other right or legal claim against us to redeem or exchange your tethers for money. We do not guarantee any right of redemption or exchange of tethers by us for money
Then it's not backed by anything, is it?