Hacker News Reader

Comment by tstegart | Hacker News Reader

Can someone explain what the purpose of this would be in plain English and plain math? I see a lot of claims but I don't understand how they work. For example, if the goal was to make money, can someone explain how $1000 would travel through this system and end up with a profit? If the goal was to benefit tether, how would $1000 in trades accomplish that?

View on HN

Tether's point is to be a fast way to get in and out of unstable cryptocurrencies. If you convert BTC to cold hard USD, you have to talk to a bank at some point and that's slow and imposes KYC requirements. Converting BTC to USDT, on the other hand, is effectively instant, and Tether's promise is that one USDT will always be worth one USD.

The catch, of course, is whether that promise is true and if it's even possible to convert your USDT to actual USD, and the answer to both seems to be "no"...

I get that, but how does this suspicious trading do anything? What does it do? It just seems suspicious at this point, but I can't actually find the math to work out the purpose, even though some people in the thread are claiming its alternatively making someone money or supporting the peg, but doesn't say how.

If I had a large amount of tether, I might wonder if I could convert that to cash money. So I look at the exchange, see lots of trades being done, and conclude that when the day comes for me to cash out it will be possible. After all, look at all these other people cashing out with no difficulty. Allegedly.

Having concluded I can cash out tomorrow, I won't try to cash out today. Which would be the point.

Reply on news.ycombinator.com