Hacker News Reader

Comment by bronzeage | Hacker News Reader

The real issue with Bitcoin is tether. Tether printing is practically responsible for almost all the gains in Bitcoin. Just look at Tether volume versus Bitcoin volume and tell me you trust bitcoins valuation when it's backed by make belief tethers.

When you can print make belief dollars, in volumes that were never proven to exist, and pretend trading them for Bitcoin is the same as trading dollars, then of course Bitcoin can arbitrarily rise. The scale of the scam is huge and regulators completely miss it.

The day regulators finally ban tether (because printing dollars should be illegal), you're going to see Bitcoin crash spectacularly. The reason Bitcoin defies all expectations is because it was never supported by real dollars.

View on HN

> "Tether printing is practically responsible for almost all the gains in Bitcoin"

It was a meme in the crypto community that when you see tether being printed, you long. Maybe it was true at some point that tether was propping up the market or maybe not fully backed[0], but AFAIK they are now doing audits[1] and transparency reports[2].

> "The day regulators finally ban tether"

I'm not sure how you would go about banning a cryptocurrency (it's been tried 100's of times) but, again, people have been saying something like this about tether forever. Every time someone tries and fails, it just gains more legitimacy (and is no longer the only stablecoin).

FYI I am in no way a BTC maxi/fanboi, but this kind of narrative has been the same since the beginning of tether and everyone so far has been wrong and the chance of a "spectacular crash" has become more and more unlikely

0. https://www.cnbc.com/2021/02/23/tether-bitfinex-reach-settle...

1. https://www.coindesk.com/tether-first-attestation

2. https://wallet.tether.to/transparency

> I'm not sure how you would go about banning a cryptocurrency (it's been tried 100's of times)

The same way we ban heroine. Or murder. We just make trading cryptocurrencies illegal and prosecute people who are found doing it.

Many IT people are biased by their work into thinking that any solution to a problem is a failure if it does not solve 100% of the problem. But in practice, most solutions are good enough if they solve 99.9% of the problem.

Regarding cryptocurrency, making it illegal would mean that no sane company would touch it with a ten-foot pole, which would not just hamper legal usage of cryptocurrency, but also illegal usage. (For instance, ransomware would not be able to have their victims pay in bitcoin if the victims don't have a legal way of exchanging legal tender for bitcoin.)

> The same way we ban heroine. Or murder

Our attempt to ban heroin (war on drugs) has been a massive failure[1] only replaced/made worse by prescription opioids[2]. Not a good example.

Murder is not something that really needs "banning" to stop the vast majority of people from committing it. The amount of people willing to use crypto is not comparable to the amount of people willing to murder (illegal or not). Not a good example.

If you want a semi-comparable example, take the attempt to make torrenting/pirating illegal. Look how that turned out.

> We just make trading cryptocurrencies illegal and prosecute people who are found doing it

Good luck with that. No other country has made much of an impact and it would require an enormous amount of resources to persecute ordinary people.

> no sane company would touch it with a ten-foot pole

> if the victims don't have a legal way of exchanging legal tender for bitcoin

There will always be another country willing to host exchanges. VPN's exist. You will never get all governments to ban crypto. Again, you are just listing ideas that have been tried and failed.

> but also illegal usage.

You think making crypto illegal... would stop people already using it for illegal reasons? They would be ok with one illegal act, but not another less valid one?

1. https://www.samhsa.gov/data//sites/default/files/report_1943...

2. https://www.drugabuse.gov/publications/research-reports/pres...

> take the attempt to make torrenting/pirating illegal. Look how that turned out.

95+% of people don't use torrenting/pirating. That worked out fine. Not great, but it's not the total failure you make it out to be.

> You think making crypto illegal... would stop people already using it for illegal reasons?

No, but it would add more friction if you did not have a choice of legal exchanges.

> 95+% of people don't use torrenting/pirating. That worked out fine. Not great, but it's not the total failure you make it out to be.

Have any data to back that up? I do:

"More than a third of music consumers still pirate music."

"In 2016, 57 million Americans were still pirating music in one form or another."

"Illegally uploading or downloading copyrighted materials takes up nearly 24% of the bandwidth used in North America, Europe, and the Asia-Pacific"

"57% of computer uses in the Asia Pacific and Central/Eastern Europe regions confess to having pirated software at least once."

https://dataprot.net/statistics/piracy-statistics/

> No, but it would add more friction if you did not have a choice of legal exchanges

"legal" in this sense means very little 1. because they are already doing something illegal so why would they care what interface they use? and 2. Making a site "illegal" in one country is very easy to get around - or else would you have to essentially advocate for a Great Firewall (which is still pretty easily circumvented)

> I'm not sure how you would go about banning a cryptocurrency (it's been tried 100's of times)

I don't think it's ever been tried in a western country.

The process is fairly simple. Pass a law banning it, if necessary with certain exemptions. Arrest and charge people who purchase, sell or even possess Bitcoin.

Most demand will disappear in that country. For the rest, handle it as we already handle similar financial crimes, like tax evasion and money laundering.

> Arrest and charge people who purchase, sell or even possess Bitcoin

Can you imagine the amount of resources required to accomplish this? The war on drugs was a massive failure and that was arguably a much easier sell than crypto. As if the US doesn't already imprison enough of it's population... talk about a victimless crime...

> Most demand will disappear in that country

Not when all you need is internet access. Supply might, but demand will not be effected much. There will also be exchanges hosted in other countries that can be easily accessed.

Crypto is made to be resilient and/or hard to trace. The normal avenues of tracking and enforcement (which already can be pretty ineffective) cannot compete. You can act like it's "fairly simple" but, as I have stated, it's been tried and continues to fail.

Just because they held appropriate balance at one point in time doesn't mean they are actually sitting on dollar reserves corresponding to tethers. They could have borrowed to reach these numbers for the report.

The current state is still that the majority of Bitcoin volume comes from tether, and these tethers aren't regulated and required to exist the same way dollars traded for stocks are required to exist. They already mixed tether reserves with other funds in the past, don't trust them to suddenly stop.

Again, you can have rational reasons for not trusting tether - and I don't necessarily disagree - but the fact is that people have been trying to "expose" it for years with no success.

The NYAG didn't find anything substantive, and neither has anyone before them. In the crypto sphere that builds trust and proves resiliency. With every piece of FUD about tether that comes and goes, the chance of it all coming crashing down gets smaller and smaller.

Nothing you have stated is a new accusation. They have been around as long as tether and the entire ecosystem has only gained more and more legitimacy.

I'm the furthest thing from a technical analysis expert of price movement, but the BTC chart looks manipulated to me. I assumed at first that it was just people trading BTC between themselves to move the market, but this theory makes more sense. BTC miners are extracting USD from their mining, while the price is controlled by other coins printing and buying BTC. New buyers of BTC are providing the cashflow into the system.

What does "manipulated" mean to you?

What does a "manipulated" chart look like?

(I'm not being cheeky, I am just trying to get a grasp on your perspective)

For the past 8 weeks it has traded in a 10% band. Why have none of the events or momentum moved the price by more than 10%. You can make the case that Tesla selling some wasn't a big deal. But with everything happening over the past 2 months there should have been at least 1 swing up or down by a lot.

> there should have been at least 1 swing up or down by a lot.

says who? why is this your criteria for "manipulation"? Are you saying that it's only been manipulated for the last 8 weeks?

If you Google "statistical anomalies and fraud" you will see several examples of where public data pointed to corruption without hard evidence. ( Madoff, Putin election )

what does that have to do with crypto? elections are not markets. Where did you get this 10% swing idea from? I bet I could find 100's of examples of equities that trade within a 10% band for much longer periods of time

Elections are markets. Markets of ideas.

>Just look at Tether volume versus Bitcoin volume and tell me you trust bitcoins valuation when it's backed by make belief tethers.

That's consistent with tether being "printed" (ie. issued without dollars backing them), but it's also consistent with dollar inflows to bitcoin exchanges that use tether. Without further evidence that's not indicative of anything.

Financial exchanges need to prove to you that trades really do happen with real money at the prices they say it happens, and that the order book isn't cooked. If I were to open an exchange for shitcoin, and show you pretty graphs and fake orders to buy shitcoin, would you believe me when I tell you that's what shitcoin is worth? no. Trades with tether are exactly that: trades with make belief dollars. Bitfinex prints tethers and shows you orders for trades in tether, while most of these trades are probably bitfinex trading it's make belief currency with itself. You should be the one requiring evidence that the trades are real.

It's funny that you talk about real dollars and their backing.

If they printed more Tether than there is demand for tether wouldn't the price for Tether-to-USD tank ?

Reply on news.ycombinator.com