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Tether Withdrawals Top $10B

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Re: Tether Withdrawals Top $10B

#401

Post by wyager »

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…

Part of the issue is that the US government keeps fucking with their bank accounts, making it difficult to have 100% of their reserves in plain old cash deposits.

Re: Tether Withdrawals Top $10B

#402

Post by fleddr »

robonerd wrote: post #234
horsecabletruck wrote: post #213

Earlier quoted context omitted.

Many things. A stablecoin that implements ERC20 interface can be used across Ethereum ecosystem and it’s smart contracts. You could even program your own smart contracts around the token, such as to setup a time lock or auction. Examples: converting it to another token on a decentralized exchange, purchasing an NFT, holding the token in a non-custodial wallet, holding the token in a multi-signatory wallet, participat…

Most of these are just "do a thing you can already do with money, but shittier"

You're starting to get it.

A government-backed crypto currency would come with a wallet. The central bank becomes both the issuer of money as well as host your account. This makes other banks largely obsolete.

Assuming it to be the main and only currency, transaction privacy fully ends. Transaction blocking and censorship would be the push of a button, pretty much your entire digital existence and access to things can be wiped out at will. Given that the majority of the world lives in an authoritarian regime, not at all a far-fetched scenario.

Money would also be programmable. The central bank can apply its monetary policy directly to your wallet. Stimulus money. Interest rates based on your behavior. The blocking of purchasing particular categories of products. Anything, really.

Re: Tether Withdrawals Top $10B

#403

Post by jakelazaroff »

function_seven wrote: post #375
jakelazaroff wrote: post #172

Earlier quoted context omitted.

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…

Why not have a step between #1 and #2? "Tether immediately sells the BTC for $10" There's still some risk if the price is rapidly moving and they can only get $9.99 for the BTC you sent them, but that could be mitigated by ordering the transactions to keep the peg: you send $10 of BTC, they sell it (and "only" get $9.99), they give you 9.99 USDT and say, "tough, what you thought was $10/BTC was really $9.99/BTC"

> Why not have a step between #1 and #2? "Tether immediately sells the BTC for $10"

Yes, why indeed? That's a great question for Tether! If they were holding enough actual cash reserves to cover all the USDT in circulation, there wouldn't be an issue.

Re: Tether Withdrawals Top $10B

#404

Post by fleddr »

ProjectArcturis wrote: post #392
randomhodler84 wrote: post #373

Earlier quoted context omitted.

We do you need to seek permission by default to save, spend and transact over the internet? Do we need permission to send TCP packets? To send an email? Consider that the internet works because it is permissive in what it accepts. What if money was abstracted from the states monetary policy, and it was as frictionless as any other internet protocol. The internet experiment changes our lives every day, in ways we cann…

So, for crime then.

Stupendous remark.

I'm old enough to have lived in a cash society. We got paid in cash and paid for things in cash. You can send cash to others. Without a cap. We didn't own some government an explanation on what we do with our money, as it's none of their damn business. "Guilty by default, prove me that you're not" is to be rejected.

Society had less crime not more. Moreover, things like capital controls do nothing at all. Criminals with half a brain are quite obviously going to work around publicly known limitations.

Re: Tether Withdrawals Top $10B

#405

Post by TameAntelope »

lmm wrote: post #384
TameAntelope wrote: post #347

Earlier quoted context omitted.

Because they've claimed it and we have no reason not to believe them, unlike USDT which we have many reasons not to believe them.

If your model is to trust entities until there's a specific reason to distrust them, I've got a billion dollars in USDLMM to sell you. Tether is larger and has been subject to more investigation than their competitors. (Don't get me wrong, I assume everyone in this space is some combination of fraud, ponzi, and money laundering)

Tether has not survived those investigations.

My model is the same as your model, you're just making assumptions I'm not.

Re: Tether Withdrawals Top $10B

#406

Post by saalweachter »

rglullis wrote: post #86
alangibson wrote: post #44

Earlier quoted context omitted.

They only had $4.2B in cash during their last attestation. The rest was unknown treasuries and commercial paper.

Who cares about their attestation? It is not a proper audit. They could just borrow money from Bitfinex, take a screenshot of them holding the money, saying "see, we have money" and then return to Bitfinex on the same day. Their attestation is as worthless as their word.

They probably didn't have more cash than they claimed during their attestation, though, so it's a reasonable upper bound.

Re: Tether Withdrawals Top $10B

#407

Post by rglullis »

saalweachter wrote: post #406
rglullis wrote: post #86

Earlier quoted context omitted.

Who cares about their attestation? It is not a proper audit. They could just borrow money from Bitfinex, take a screenshot of them holding the money, saying "see, we have money" and then return to Bitfinex on the same day. Their attestation is as worthless as their word.

They probably didn't have more cash than they claimed during their attestation, though, so it's a reasonable upper bound.

Upper bound, yes. Reasonable, no.

They are not a reliable narrator, and they have been convicted in multiple jurisdictions over fraudulent statements. There is no "reasonable" argument that this time they should be trusted.

This will only be solved when completely implode or in the miracle shot that they pass through a rigorous independent audit.

Re: Tether Withdrawals Top $10B

#408

Post by jakelazaroff »

aeternum wrote: post #369
jakelazaroff wrote: post #172

Earlier quoted context omitted.

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…

This is a common misconception and is not at all how Tether works. Tether acts more like a central bank, they allow people to trade USD for USDT for exactly $1. Trading USD directly can be difficult because there are extensive KYC rules and not everyone has access to a USD bank account. On some exchanges, there is still a demand to trade in USD and it commands a premium due to the difficulty in trading it. This gener…

> They should have $1 USD for each USDT in circulation, and that's a lot of 'float' that they can invest in safe things like short-term US treasuries to make money off simply holding the cash.

That's the issue — they don't have $1 USD for each USDT in circulation.

Re: Tether Withdrawals Top $10B

#409

Post by lmm »

randomhodler84 wrote: post #327
missedthecue wrote: post #288

Earlier quoted context omitted.

Way too much counterparty risk in crypto markets. If there is an epic tether crash, I can't be confident that I'll get my payout. Compare this to established markets. I could log into my Charles Schwab account, make a short bet that Charles Schwab will go bankrupt overnight, and if I'm right, I know I'll get my payout.

The counter party is a smart contract AMM like curve or aave. Your only issue is liquidity and chain reliability.

Both of which are pretty big issues in the scenario we're talking about. When Tether crashes it will take down a significant chunk of the crypto world with it.

Re: Tether Withdrawals Top $10B

#410

Post by horsecabletruck »

ProjectArcturis wrote: post #353
randomhodler84 wrote: post #328

Earlier quoted context omitted.

“But without permission”. Shittier might be acceptable if you do not wish to seek permission. Which is the whole point.

So, for crime? Like, what is the legitimate use-case where not needing permission is the defining requirement?

Peer to peer and permissionless does not mean criminal. It is how the web, email, end to end encryption protocols work. Most of HN would probably agree that E2EE and open source communication protocols are a good thing despite these tools also giving criminals an easier way to communicate without oversight.
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