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Comment by darawk | Hacker News Reader

Once again, people here are ranting about Tether, while the market price is re-converging to parity. I wonder who's right, the people yelling in the comments section, or the people with skin in the game? What's been established here is that Tether is 74% collateralized by cash and short term securities. The other 26% is in the form of a loan to Bitfinex. Bitfinex is a cash-generation machine, and should not have any trouble making payments on that loan. Your local bank has a much, much lower reserve ratio than this.

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> while the market price is re-converging to parity

Given the "market price" of most crypto is based in USDT not USD it kinda makes you wonder how legit any of the "market price" figures really are? Plus given there is absolutely no auditing for any of the exchanges in the market, for all you know "market price" could be determined by nothing more that scripts that just SQL INSERT fake transactions in their database (assuming they are using SQL.... which given this is crypto is suspect.... I wouldn't be surprised to learn many of these people are using things like mongo to handle their financial transactions)

> Your local bank has a much, much lower reserve ratio than this.

My local bank is also audited and heavily regulated. I sleep every night without ever worrying that my bank is suddenly going to lose all my money.

Also, given that bitcoin's ethos is all about being anti-fed and "no printing money" it is rather funny to hear somebody defend tether being anything less than 100% backed by some "real" asset.

> Given the "market price" of most crypto is based in USDT not USD it kinda makes you wonder how legit any of the "market price" figures really are?

Coinbase, Kraken, and Bitstamp are all legit exchanges that offer non-tether USD pairs. Binance offers many other stablecoins besides Tether. More than enough trading is conducted in non-tether pairs for the price to be legitimate.

"My local bank is also audited and heavily regulated. I sleep every night without ever worrying that my bank is suddenly going to lose all my money."

2008.... those "heavy regulations" and "audits" meant nothing.

How many deposit accounts evaporated in 2008?

I don't know the right number but I do know of at least 2 acquaintances who lost all their families life savings. The legal process to get the money back is actually still ongoing but during that time we changed our national currency to euros and those life savings are worth about 10% of what they were back then.

Thing is, with crypto you invest (usually) what you can afford to lose and you accept the risk. With banks most people think it's safe and risk-free so then the impact of losing it all is so much harder, it ruins lives.

You're describing a different process.

People lost their life savings because they purchased assets that went down, or they lost their jobs in the general economic downturn. Nobody lost their life savings because their bank suffered a run and their deposits were lost.

To extend the metaphor, this is the difference in getting wiped out in the 2017-2018 crypto crash, and getting wiped out by Mt. Gox.

Im not describing a different process, they had their money in a savings account on a bank that went under, they have been liquidating it's assets since the 2008 crisis to repay people and it's still not done.

Which bank?

You paid for it via a bailout

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