Hacker News Reader

Comment by qeternity | Hacker News Reader

Too late to edit my original comment but a lot of people pointing to the "peg" as proof that Tether is legitimate.

The only peg that exists is the one whereby you should be able to go to Tether Inc and redeem USDT for USD 1:1. That peg has never ever been demonstrated (publicly).

All the other "pegs" are just cash trading. If I trade USDT/USD on Binance...I don't actually have USD. Even on that pair, my USD profit/loss are denominated in USDT.

For anyone who disagrees with the above - please show me market where I can go sell my USDT directly for USD.

View on HN

> For anyone who disagrees with the above - please show me market where I can go sell my USDT directly for USD.

Genuinely curious, as someone who has never used Binance nor USDT:

Why is the "directly" part here significant? If I can USDT (Binance) -> USD (Binance) -> BTC (Binance) -> BTC (Coinbase) -> USD (Coinbase) -> USD (My Bank), then whats the difference other than a few extra steps?

Apart from the fact that there are transaction costs and time delays (it'll take about half an hour after you bought BTC on Binance that you can sell them on Coinbase), what guarantees that the BTC price is the same on Coinbase and Binance?

Well, arbitrage! But suppose BTC it is much higher on Binance. You'd then take USD and transfer them to Coinbase:

USD (Coinbase) -> BTC (Coinbase) -> BTC (Binance) -> USDT (Binance) -> ??

Now you need to take these USDT and turn them into USD, to keep the arb running. But that is precisely what doesn't work.

So: the chain you outline is NOT a way to "directly sell USDT for USD", as links can break down.

It's basically the difference between a fiat currency and one backed by something.

For example, something vaguely analogous would be:

[Setting: The Olden Days] GP: "I'm concerned because nobody has ever tried to take USD to the government and directly get silver/gold for it." You: "Why is the "directly" part here significant? If I can USD (My Pocket) -> USD (My Brokerage) -> Gold (My Brokerage) -> Gold (My Pocket), then whats the difference other than a few extra steps?"

The difference is that we never tested to see if the USD is actually backed by real gold.

You can't USD Binance. That's my point.

There are easier paths, such as:

USDT -> kraken[1] -> USD -> your bank

or even

USDT -> bitfinex[2] -> your bank

[1] https://trade.kraken.com/charts/KRAKEN:USDT-USD

[2] yes they do allow fiat withdraws https://support.bitfinex.com/hc/en-us/articles/213919309-Fia...

nice in theory but practically if you try to withdraw from kraken you often get a plethora of errors, including "this function is currently disabled". this happened during the last run and this happened this week.

Kraken.com has an actual USDT/USD pair you can trade and use actual hard currency.

Yes, you can trade them there. However, there is no mechanism imposed by Kraken to keep the price close to 1. It is purely supply and demand. Nothing prevents the price of USDT from collapsing (apart from arbitrage predicated on exchanging USDT back into USD).

> For anyone who disagrees with the above - please show me market where I can go sell my USDT directly for USD.

Kraken, Bitstamp, did so for 3 years+

And I wonder why Bitstamp, a fairly legitimate shop, stopped using Tether...

Reply on news.ycombinator.com