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Comment by Flatcircle | Hacker News Reader

If you spend 10 mins looking into tether online, it’s easy to see it’s a totally fucking scam. It’s unbelievable.

I like how it's always people who spent 10 minutes looking who say it's a total scam.

What percentage of tether doomsayers here have ever traded a significant amount of tether? Don't get me wrong, I also don't trust tether and think there's an unacceptable amount of sketchiness there, but simply looking at who's at each side of the debate should show you that it's not as slam dunk as you think it is.

I can trade in and profit off of snake oil, and there are lots of snake oil salespeople around the world - but it’s still snake oil at the end of the day.

What percentage of lead paint critics have actually tried licking lead paint? My kids love it, so it can't be that bad

> What percentage of tether doomsayers here have ever traded a significant amount of tether?

"But what percentage of people who say that dioxins are dangerous have ever jumped into a big swimming pool full of dioxins?!"

I mean, if you think tether is a scam, you are probably going to refrain from going anywhere near it.

Tether and Bitfinex are entirely banned in New York State and I really don't think it will be too long until other states follow suit and likely the SEC too.

I have spent 10 min looking into it, and I'm suspicious. But could you maybe elaborate?

Their Wiki page[0] is quite damning:

    Tether is a controversial[1] cryptocurrency with tokens issued by Tether Limited, which in turn is controlled by the owners of Bitfinex.[2][3] Tether Limited formerly falsely[4] claimed that each token was backed by one United States dollar, but on 14 March 2019 changed the backing to include loans to affiliate companies.[5][6] The Bitfinex exchange was the subject of a lawsuit by the New York Attorney General of using Tether's funds to cover up $850 million in funds missing since mid-2018.[7][8] The investigation found that iFinex — the operator of Bitfinex and Tether — made false statements about the backing of the Tether and about the movement of hundreds of millions of dollars between the two companies to cover up the truth about massive losses by Bitfinex. According to the New York Attorney General, "Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie".[4]

[0]: https://en.wikipedia.org/wiki/Tether_(cryptocurrency)

This article was an entertaining read https://www.kalzumeus.com/2019/10/28/tether-and-bitfinex/

It really is quite obvious- the funny thing is the USD/Federal Reserve has been running the same scam for decades (expanding the money supply with no backing) and it's just as obvious

The difference is the fed is up front USD is unbacked, whereas tether lies about USDT's backing. In the financial system it's often not a problem to sell something as long as you're up front about what it is.

False equivalence much?

I didn't realize Tether owns eleven aircraft supercarriers and collects tax revenue from 330 million people. Pretty impressive for a company that operates out of a backroom somewhere in the Bahamas.

That's on par for Tether, which has 13 employees managing ~$65B in funds, meaning everybody including the janitor manages a portfolio of $5B. The poor schmucks at Goldman Sachs can only manage around $18M per person.

I always enjoy this argument that approximately goes "don't worry, if the dollar goes tits up, Uncle Sam will just bomb people until it's alright again."

Unfortunately, it's true.

More like “if the dollar goes tits up, Uncle Sam has enough assets in the real world to maintain infrastructure and law and order.”

US government services will always only accept USD, which means the dollar is tied back to real-world value. taxes, services, etc.

This is getting downvoted, but if I'm wrong, then please do explain to me what is this argument supposed to mean? I mean the one that's usually very explicitly phrased as "the value of the dollar is backed by the US military", which gets said all the time when people compare the value proposition of fiat currency to cryptocurrencies.

I've always understood this to mean "if people stop accepting the USD, the military will make them do so by force". But by all means, do tell me of what other ways aircraft carriers can be used to support the value of the dollar.

I'm not even saying that this is factually incorrect (though I don't know if it is). I'm just pointing out the perversity of this argument. It gets brought up surrounding the current inflation debate all the time too. I don't like the casual-ness with which people can say what amounts to, essentially, "don't worry, we can always resort to deadly violence if we need to."

That doesn't legitimize it in my eyes, it's still a scam. Ancient Rome was also the leading regional superpower in its day, that doesn't make it OK for them to debase their currency by filling the silver coinage with lead.

And that caused downward spirals when it started, centuries ago. Paper money is tempting people to print since it started, however societies have learned how to do it for a net positive, will USDT manage the same?

Well you're right, retail banks and central banks do operate fractional reserves. The problem is that Tether/Bitfinex claim every single Tether is backed by a dollar but they are lying. If they want to operate a fractional reserve, why not register as a bank legally?

The money supply has to expand because our economy expands. If an economy keeps producing more things more efficiently, you need your money supply to also expand, or you will have deflation and the economy will grind to a halt.

If you produce things more efficiently they should cost less, the money supply shouldn't expand to make sure their cost stays the same or more. Nobody can be entrusted with the authority to "expand the money supply" and not abuse it to the point of collapse. Case in point:

https://fred.stlouisfed.org/series/M1

It's also just as obvious that everyone will agree for the foreseeable future that USD can be used to buy things, do things.

Given that people already disagree about the status of Tether, it's not nearly as obvious.

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