It wouldn't disappear, money is just changing hands. Bitcoin doesn't add or destroy any value, it's just a speculative way of zero-sum trade. When you buy bitcoin, someone else gets your money.
Nope, not a fraud.
Print, lol. They are just a prime money market fund, setup exactly the same way the funds your parents kept in their 401k.
Surprise, commercial banks that lend to you, like mortgage or car lease are actually creating money out of thin air. Unlike tether which is fully backed.
In the US commercial banks are required to maintain a certain % of cash reserves relative to all deposits. They are also FDIC insured. Tether is neither insured nor required to maintain any reserves. Their recent filings show that less than 3% of tethers are actually backed by cash, and the bulk of tether is backed by anonymous 'commercial paper,' aka IOUs. Tether also declined to disclose the credit rating of this commercial paper, or who the counter-parties are.
Once the BTC world stops trying to hide, obfuscate or otherwise cover for bad actors it will be possible to create meaningful financial innovations that scale.
Yes, ZERO. Please check with your own eyes: https://www.federalreserve.gov/monetarypolicy/reservereq.htm
Please observe that 3% is actually much higher than 0%.
The rest of bank's book is usually assorted IOUs as well: commercial paper (aka bonds issued by companies) and mortgages. All of these assets that the Fed buys whenever any bank is in trouble, you can look this up in any news source.
Tether is simply just another offshore bank.
None of offshore USD deposits are insured by the FDIC. Yet, offshore banks hold trillions of dollars. They also have higher than zero reserves, just like Tether does.
There is nothing going on, just clickbaity nonsense media churns out for ads.
If tether is all above board then why not disclose more about the commercial paper they hold? Other stablecoins seemingly have no issue there.
Asking valid questions is not FUD.
2. I agree tether runs their operation in a bit of an opaque way.
However, that should be the criticism indeed, not the composition of their portfolio, which is much the same as any other bank, really.
To steelman Tether's position, it seems that their opaqueness is an intentional strategy to make them more resilient. They could easily get a bank charter somewhere, however you lose control, and must share it with the regulator. Regulators will review and approve directors/offices of the bank, you may in fact lose control over your own business. It also comes with all sorts of jurisdictional and political risk. Having been in that industry, I can sympathize with Tether, it's extremely hostile to large fintechs.
They could be targeted simply for political reasons, or because someone connected decides to destroy by leveraging their regulator buddies power.
How do you prevent that, without being opaque and telling those that may target you, exactly where all your assets are so they can just freeze them directly?
I really wonder if they ever disclosed to NY AG whose commercial paper they hold.
Thought experiment. I buy 1 BTC and pay you $50k. The current market price is $35k. Where did the $15k go?
What I really mean is that we sit down in the same room. You bought the BTC for $1 in 2013. Today I give you $50k in $100 dollar bills, you send me your 1 Bitcoin. I am deliberately ignoring the current exchange rate to prove a point. What happened is that I overpaid by $15k, I immediately lost $15k on this transaction. You got a bargain and gained $15k on top of the $35k you would have gotten from simply holding onto your Bitcoin in this transaction.
jasonlaramburu says "When the price crashes money disappears." but there are still 500 $100 dollar bills in the room. The price "crashed" by $15k the moment I purchased the BTC but the money I gave you didn't disappear, it just changed hands in a very unfair manner.
You can expand the model to include all BTC buyers and sellers. It doesn't change the fact that US currency was devalued to generate an economic stimulus. A meaningful % of that stimulus was spent into 'the room.' The value of certain assets in the room was massively overstated and crashed. The stimulus money cannot be recovered, but Americans must live with the inflation and other impacts for many years.