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Are pixie fairies behind Bitcoin's latest bubble?

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Re: Are pixie fairies behind Bitcoin's latest bubble?

#71

Post by pavlov »

paulgb wrote: post #43
rabf wrote: post #24

Earlier quoted context omitted.

Please link your sources, their reserves as I understand may in some part consist of unspecified collateral, even if they are crypto which I seriously doubt due to its volatility the fact remains that Tether is trusted enough to be supported by the majority of major exchanges. The imminent demise of tether has been predicted for many years now. You can short tether at Kraken or choose to use one of the many other USD…

> The imminent demise of tether has been predicted for many years now. One thing that has stuck out at me from a white-collar crime reading spree is the amount of time that passes between something widely being seen as fraud by those who looked closely and when the walls actually start crumbling down. Enron, Madoff, Theranos, etc. all had people ringing the alarms long before the music stopped.

Wirecard was one of Germany’s largest tech companies with a market cap of $25B until recently.

Short sellers first identified suspicious activity at the company around 2006. But it took 13 years for the house of cards to collapse. For over a decade, Wirecard stock just went up.

The company is bankrupt and worth practically nothing today.

If/when shit finally hits the fan at Tether, the crypto bagholders will look back with the same bewilderment as Wirecard investors did: “Wasn’t all this talk about fraud proven false long ago?”

Re: Are pixie fairies behind Bitcoin's latest bubble?

#72

Post by arcticbull »

1996 wrote: post #69
arcticbull wrote: post #66

Earlier quoted context omitted.

And yet going from 1:1 backed (ostensibly but not ever audited) to 1:0.7 backed it still traded 1:1. That’s my issue with it. The fact that they got caught with their pants 30% down is the least surprising thing ever imo. In fact as I recall they continued to tell people they were backed 1:1 for many months after the seizure. Remember BFX and Tether pretended to be two separate companies until the paradise papers bec…

I agree with you, I just find your consistent and persistent myopia interesting: for you, nothing can ever be good in crypto!

Well, I wouldn’t call it myopia (naturally, I suspect anyone with such a myopia wouldn’t haha by virtue of not being able to see past your blinders - but I digress). I’ve done and continue to do a lot of research to challenge my opinions on this subject and any other I feel passionate about. For instance, I’m a lefty and I watch a ton of Fox.

I simply do not believe that the core tenets of crypto (decentralization, trustlessness, irreversible, “hard money,” etc) are good things to have in a currency. I don’t think trustlessness extends past cryptocurrency in a meaningful way beyond things captured entirely on the blockchain as that breaks down at the boundary between on and off chain (ie garbage in garbage out). I believe humans are fallible and trust is a massive optimization - and a system that doesn’t take those into account isn’t worth the NAND it’s stored on.

I’ve yet to see anything solved with a blockchain better than a classical solution - 12 years and billions of dollars scammed later. Such a thing would change my mind, and I would certainly eat my, err, hat (Hi Mr McAffee) and admit publicly, on Twitter, and here, and anywhere, that I was totally and incredibly wrong.

At least I’m on message! :)

Re: Are pixie fairies behind Bitcoin's latest bubble?

#73

Post by seppel »

raziel2701 wrote: post #16
seppel wrote: post #12

Earlier quoted context omitted.

> Even if the tether is only worth $0.70 it’s still a better deal for some people who can’t exit their BTC position legally. I don't get this part. What can you buy using tether, even if it is worth only $0.70? (Well, obviously you can buy bitcoin but this doesnt make any sense to buy the bitcoin back that you just sold. What else can you buy?)

You can trade tether for other crypto in some exchanges.

Yes but then someone else has the tether.

Re: Are pixie fairies behind Bitcoin's latest bubble?

#74

Post by Rainarrow »

seppel wrote: post #2

I don't really get it (as always if tether is involved). If someone is printing tether to buy bitcoin, then who is selling bitcoin for tether and keeps the tether? I mean, if I had substantial bitcoin, I'd not sell it for tether. Maybe I'd use tether as some intermediate currency, but in the end I'd either buy stocks or real estate or yachts. Or I would keep the BTC. But I would never sell BTC and keep tether. Who do…

>> then who is selling bitcoin for tether and keeps the tether?

People who believe (in varying degrees) that 1 USDT == 1 USD.

In countries with strict capital controls (China, Russia, etc), USD is inaccessible to most people. And the fact that USDT has been trading at 1 USD for the most part is the proof that most of its users either believe 1 USDT == 1 USD, or they simply don't care.

In these countries, you have large amount of OTC desks due to lack of access to exchanges. Those OTC desks have to provide liquidity for large amount of trading activities (very large but I wouldn't think it's anywhere close to the 13b USDT that was printed in the last 6 months), and therefore they have to hold sufficient amount of USDT for that purpose.

Once you have a group of people (miners, traders, etc.), USDT could act as as a token valued at 1 USD among those people, and at any given point, there would be a significant amount of people holding large amount of Tethers. After all, the Tether "FUD" has been ongoing for years and nothing bad seems to have happened, right?

Re: Are pixie fairies behind Bitcoin's latest bubble?

#75

Post by seppel »

raziel2701 wrote: post #25
seppel wrote: post #10

Earlier quoted context omitted.

> Print tether, buy bitcoin, sell bitcoin for real money. But to buy bitcoin for tether, you first need someone to sell bitcoin for tether. And this guy then has tether. What is he going to do with the tether? > Day traders use tether to slip in and out of positions in a volatile market. Unregulated exchanges use tethers in place of real dollars. But day traders close their positions at the end of the day (or at leas…

A number of exchanges like bitfinex are in on the scam and are just holding the tether in cold storage: https://i.imgur.com/eIKDzJl.png The exchanges will make money if btc goes up and more people buy it through them. By accepting tether for bitcoin they help pump up the price. Holding useless tether is fine as long as more retail comes in to them for bitcoin with USD.

> A number of exchanges like bitfinex are in on the scam and are just holding the tether in cold storage

But how can that be a scam if they hold the tether? It can only be a scam if someone else now has the tether and they have the real money. I'm trying to understand who is getting scammed here.

Moreover, why are they printing tether if they already have too much?

Re: Are pixie fairies behind Bitcoin's latest bubble?

#76

Post by seppel »

smabie wrote: post #30
seppel wrote: post #10

Earlier quoted context omitted.

> Print tether, buy bitcoin, sell bitcoin for real money. But to buy bitcoin for tether, you first need someone to sell bitcoin for tether. And this guy then has tether. What is he going to do with the tether? > Day traders use tether to slip in and out of positions in a volatile market. Unregulated exchanges use tethers in place of real dollars. But day traders close their positions at the end of the day (or at leas…

What, no? Tether is used as collateral for crypto futures positions. No day trader is buying spot, they are buying swaps (perp futures) or regular futures. And it's better to hold the collateral in tether or some other stable coin than in btc so you don't have to hedge as much exposure by writing futures.

I see. And these traders are responsible for the increased demand of tether?

Re: Are pixie fairies behind Bitcoin's latest bubble?

#77

Post by seppel »

raziel2701 wrote: post #27
paulgb wrote: post #7

Earlier quoted context omitted.

This doesn't create any net demand for Bitcoin, though, right? It's in one end and out the other. Or is the theory that Tether is actually backed by Bitcoin, in a sort of circular way that is sustainable as long as the Bitcoin price goes up but would unravel disastrously if the price were to come down?

Print tether for bitcoin, so the btc-usdT price goes up. Arbitrage bots buy btc in dollars so that btc-usd reaches parity with btc-usdt. The media and people notice that btc has gone up, euphoria is borne, they jump in, further driving the price up, narratives like paypal are used to explain the pump. The people that printed tether now sell their btc for a profit and can now cover their tether obligations to keep the…

> The people that printed tether now sell their btc for a profit and can now cover their tether obligations to keep the illusion going that tether is 1:1 backed with usd. They can now repeat the tether printing cycle.

And who is getting scamed here? Who is sitting on the tether at the end of the day?

Re: Are pixie fairies behind Bitcoin's latest bubble?

#78

Post by raziel2701 »

seppel wrote: post #75
raziel2701 wrote: post #25

Earlier quoted context omitted.

A number of exchanges like bitfinex are in on the scam and are just holding the tether in cold storage: https://i.imgur.com/eIKDzJl.png The exchanges will make money if btc goes up and more people buy it through them. By accepting tether for bitcoin they help pump up the price. Holding useless tether is fine as long as more retail comes in to them for bitcoin with USD.

> A number of exchanges like bitfinex are in on the scam and are just holding the tether in cold storage But how can that be a scam if they hold the tether? It can only be a scam if someone else now has the tether and they have the real money. I'm trying to understand who is getting scammed here. Moreover, why are they printing tether if they already have too much?

Bitfinex benefits from the increased business from retail investors that are lured by the bubble mania, that is one solid source of profit from running this scheme. While Tether, the company, makes a killing by buying btc low and selling high, they now have cash to back sufficient tether to cover whomever wants to convert their tether back to usd, such as say, their co-conspirators bitfinex.

Tether is pretend-dollars that allows them (bitfinex and Tether the company) to fraudulently pump btc. As long as enough people believe 1 tether = 1 dollar, the show will go on. Tether has yet to be audited to prove their reserves, and the crypto community believes them even though they talk about trustless systems all the time.

So this is a two party scam, one is Tether, the company, printing money out of thin air, who then the exchange, the second party, accepts and gives btc in return as if tether was backed 1:1 by USD. This transaction is what kicks off the chain reaction that pumps btc's value. Tether, the company, now sells btc for USD at a profit, and can use that money to convert tether back to USD if say, the exchange comes to them looking to trade tether for btc. So both parties win, and tether is just weird monopoly money that they know is useless but they have to continue pretending it's worth 1 USD or else they can't keep rinsing and repeating this cycle.

Re: Are pixie fairies behind Bitcoin's latest bubble?

#79

Post by raziel2701 »

seppel wrote: post #77
raziel2701 wrote: post #27

Earlier quoted context omitted.

Print tether for bitcoin, so the btc-usdT price goes up. Arbitrage bots buy btc in dollars so that btc-usd reaches parity with btc-usdt. The media and people notice that btc has gone up, euphoria is borne, they jump in, further driving the price up, narratives like paypal are used to explain the pump. The people that printed tether now sell their btc for a profit and can now cover their tether obligations to keep the…

> The people that printed tether now sell their btc for a profit and can now cover their tether obligations to keep the illusion going that tether is 1:1 backed with usd. They can now repeat the tether printing cycle. And who is getting scamed here? Who is sitting on the tether at the end of the day?

Retail people seeking to get into bitcoin in the middle of this bubble are getting scammed because tether is being used to artificially inflate its value. If tether goes away that would hurt whomever believes it's worth a dollar. The exchanges who are in on the scam can trade tether back to USD if they need to when the tether company sells their bitcoin for a profit. But the exchanges also make a killing from increased business during this mania, so they may choose not to sell their useless tether since they are collecting real money from retail traders and might help with plausible deniability.

Re: Are pixie fairies behind Bitcoin's latest bubble?

#80

Post by seppel »

Rainarrow wrote: post #74
seppel wrote: post #2

I don't really get it (as always if tether is involved). If someone is printing tether to buy bitcoin, then who is selling bitcoin for tether and keeps the tether? I mean, if I had substantial bitcoin, I'd not sell it for tether. Maybe I'd use tether as some intermediate currency, but in the end I'd either buy stocks or real estate or yachts. Or I would keep the BTC. But I would never sell BTC and keep tether. Who do…

>> then who is selling bitcoin for tether and keeps the tether? People who believe (in varying degrees) that 1 USDT == 1 USD. In countries with strict capital controls (China, Russia, etc), USD is inaccessible to most people. And the fact that USDT has been trading at 1 USD for the most part is the proof that most of its users either believe 1 USDT == 1 USD, or they simply don't care. In these countries, you have lar…

> People who believe (in varying degrees) that 1 USDT == 1 USD.

I totally get that part. But then what? With USD I can buy, e.g, a house or a yacht. With USDT I can buy what? I guess only other crypto currencies. So what is the endgame here?

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