Anyone Seen Tether’s Billions?
bloomberg.com
bloomberg.com
"The chief financial officer is Giancarlo Devasini, a former plastic surgeon from Italy who was once described on Tether’s website as the founder of a successful electronics business.
The only reference to him that turned up in a search of Italian newspapers showed he was once fined for selling counterfeit Microsoft software.
Elsewhere on the website, there’s a letter from an accounting firm stating that Tether has the reserves to back its coins, along with a pie chart showing that about $30 billion of its dollar holdings are invested in commercial paper—short-term loans to corporations. That would make Tether the seventh-largest holder of such debt, right up there with Charles Schwab and Vanguard Group.
To fact-check this claim, a few colleagues and I canvassed Wall Street traders to see if any had seen Tether buying anything. No one had. “It’s a small market with a lot of people who know each other,” said Deborah Cunningham, chief investment officer of global money markets at Federated Hermes, an asset management company in Pittsburgh. “If there were a new entrant, it would be usually very obvious.”"
https://www.bloomberg.com/news/features/2021-10-07/crypto-my...
Follow BennettTomlin on Twitter, he has been researching tether for years.
They value their paper “at redemption value” which is a loophole so big they don’t need to lie. They can hold $10 billion worth of paper and value it at $30 billion.
A bank that had a 33 year old "Deputy CEO" who gave interviews from his gaming rig.
Who claimed to have graduated from HEC Lausanne in Switzerland with a Masters in Science when he was 15...
and then immediately get a job as Professor of Finance at a Lebanese university...
while dividing his time between running funds in Switzerland and oh ... Jacksonville Florida (actually, that last part is the most believable), where he worked for himself, managing a fund that he couldn't even spell correctly on his own LinkedIn profile (Independance[sic] Weath[sic] Management).
Of course, the last interview he gave, the bank removed him from their website within hours once the ridicule started piling on. When people started questioning that, they very quickly re-added him. And then removed the site entirely. And put up a WordPress template website with completely non functional links and buttons a few days later.
I keep waiting for Yakety Sax to start playing, but to the true believers, it never does, and apparently all us nay-sayers are just neanderthal and don't see "the vision".
The 55 years old/70 year old thing could have some legitimacy, kinda. Banks like to be seen as being very old, implying stability. There is a popular regional bank where I live that was established in the 1970s. But this bank says that it is more than 150 years old. Why? It turns out that it bought out a bank that was founded around 1860. Since that bank is now part of them, they reason, they have a history that goes back that far. Sketchy if you ask me, but apparently legal. (?) If Deltec bought an older bank, then maybe they are using the same justification.
It reminds me of the initial dot-com bubble, where anybody who asked questions was also painted as not getting it. Ditto the mortgage bubble, come to think of it.
Then when the inevitable crash comes, nobody apologizes. It's either "who could have known" or just moving on to the next grift and never saying another word.
Seems to be a general pattern when there is an economic or policy “bubble” and big players in an organization or sector are holding the bag.
Everyone who holds cryptocurrency is holding Tether’s bag of poo. No they are not even the majority of money in cryptocurrency, but they are enough to prop up the price a lot given that it’s a fairly thin market. They are also structured so as to make it very easy to use their funny money to manipulate cryptocurrency price.
Their joker CEO sounds like a cutout and fall guy.
Or they recognize you can't time the market, and see upside despite a nearly-inevitable tether crash? If investors had been waiting for tether to crash they would have missed the run from $1k - $30+k, and I don't think you can claim with a straight face that was all tether manipulation. Again, can't time the market.
Anyway, it’s easy to make a circular argument of “people buy it because they are fools, and they are fools because they buy it.” You’ll be right whether it goes up or down so there’s not much of a debate to be had..
The trouble is, it doesn't actually have another one, not a practical one.
If you are actually unaware, and not just arguing in bad faith, most development right now is happening on Ethereum and DeFi apps running on Ethereum. You can get collateralized loans, there are decentralized prediction markets, stuff like that.
And yes, more development is always happening. Success is always in the future. Never mind that M-Pesa and Venmo and Android and Tesla all started around the same time. Uber and Lyft and Twitch and TikTok all launched years later. They all have actual success. None of them are hammers blundering around in search of a nail. None of them have to keep blowing smoke about the incredible future ahead.
But in the same way that Bitcoin is making no difference today in the real-world payment markets, none of that development is making a difference today in their equivalent markets. Colateralized loans, if they work, are 0% of the total colateralized loan market. Prediction markets have existed for more than 20 years. Adding "decentralized" doesn't make them better. Most of that "innovation" is in the category of dancing bears: the impressive part is not that the bear dances well, just that it's a bear doing the dancing.
But since you can't name a purpose, I'll just tell you: The actual current purpose of the whole circus is to enable assorted grifts. When Bitcoin got popular, that's what drove it: people seeking unearned wealth, and the people preying on the suckers with money to lose. That has kept snowballing, grift upon grift and with massive effort to create more suckers to keep the grifts going just a little longer.
Are there reasonable people caught up in this? Sure. As Madoff showed, many of the people involve on both sides of a Ponzi scheme are perfectly sincere believers. But neither their belief nor their sincerity changes the underlying truth: there is no value being created. Nobody can admit that, of course, so they just claim that the value creation is just down the road if only you hodl and believe hard enough.
Prediction markets have probably existed for thousands of years, but this is where we disagree. Decentralization is a fundamental improvement to a betting market, because there is no longer a counterparty who is incentivized to cheat you when you win, or incentivized to take on so much risk that they cannot pay you back if they lose.
> Colateralized loans, if they work, are 0% of the total colateralized loan market.
You sure about that? There's nearly $100B locked in DeFi, although admittedly that's more than just collateralized loans.
You can disagree with that but the snarkyness of "you can't name a purpose" isn't necessary, I've named multiple. It's easy to find cases where a company took much longer to become successful that Uber and Lyft and ended up doing much better than both. I don't find that argument very compelling do you?
I think folks on either extreme of "cryptocurrency is going to eat the world" and "cryptocurrency is literally a trillion dollar scam" should really try to second guess themselves a bit. I think emotions get in the way a bit.
Everyone who holds Tether is holding Tether’s bag. If you don’t own tether, this doesn’t directly affect you. Most of the people I know don’t own (and have never owned) Tether.
Tether (or a substitute stablecoin) is currently a requirement for lots of the Wall Street investment in cryptocurrencies. If it turns to poo, lots of that Wall Street investment does too and it creates huge liquidity/ volume issues.
A Tether crash would take down a lot of stuff.
After all, tether is 3% of total market cap, I think it's fair to say the effect if they disappeared tomorrow would be a bit bigger than that in an emotional market, might see a 40% dip or so but after that greed would make a recovery pretty fast and then grind to all time highs like allways. my five cents.
edit: As the Dothraki slaves would say it, tether has pretty scummy people behind it, it is known. but that's ok.
Your basic theory here is that bubbles always keep going up, even if sometimes they go down. But that's not how bubbles work. Tulip bulbs did not "grind to all time highs like allways". Neither did Beanie Babies. They both fell back to something approximating their use value. But what's the use value of some numbers on another person's computer? Approximately zero.
JC: "It's not much of a bank."
MP: "Well, it's very clean, sir"
JC: "It's certainly uncontaminated by crypto-backed dollars."
Now I enjoy American TV too but I can't think of an All-in-the-Family, Nightcourt, or Scubbs scene here. But if you know the "aaaaannnnnnnd it's gone" ... line well you can riff from there.
This article talks about the way Tether is loaning out what reserves they have. The Economist looked at this phenomenon and found Tether has a 383-to-1 leverage. That's going to be a complete disaster the moment there's a major blip in the economy. Say, a major Chinese real estate company going broke. Or interest rates in the West finally going up and causing a market correction. Maybe that's what will blow it up.
The good news is the Economist also thinks the inevitable cryptocurrency disaster will be bad but won't destroy world economies. " its holders would lose hundreds of billions of dollars but that the fallout would be manageable." I sure hope that happens before this tower of unregulated investments gets so big that when it falls over it crushes the real economy.
But don't worry folks, this is all good for Bitcoin.
https://www.economist.com/leaders/2021/08/07/why-regulators-...
Tether was founded as Realcoin in 2014 by a group including former child star and accused sex offender Brock Pierce, so while it’s technically just rounding the 7 year mark, it didn’t begin in earnest until it was taken over by Bitfinex towards 2015 and didn’t become majorly problematic until 2016/2017 according to the NYAG findings. [1]
Given the vastly larger scope here, I suspect we’re going to be dealing with them for a few more years as the wheels of Justice spool up.
For anyone wanting to learn more I highly recommend Bennett Tomlins write up. [2]
[1] https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...
[2] https://bennettftomlin.com/2020/12/08/an-introduction-to-the...
This makes your argument seem conspiracy-theory-esque, despite your links having some quality information. That quote is more akin to clickbait than it is a valid point in your argument.
It speaks volumes that this is the kind of characters interested in this space.
If you remember in the movie, Cohodes got his ass handed to him as banks margin called him out of his position and that's in a regulated market. These guys own their market and the exchange on which it originates. There's no way to even verify if they received dollars for every tether issued and by some miracle the yield on USDT is incredible. You'd be losing 4-5% a year guaranteed holding a short position.
1. Borrow 2. Sell 3. Wait 4. Buy back 5. Close
There is USDT lending available. Even more, there is decentralized collateralized lending available.
If someone wanted to short USDT there are plenty of opportunities to do so. (And there might be a lot of people doing so, specially now that the shadyness is being reported on some of the more reputable traditional newspapers)
I believe FTX has some 10+ billion USDT on hand. That'll put a serious hole in their balance sheet. Not to mention whatever would happen to their futures insurance fund when the collateral evaporates. I'm trying to find my source for their balance sheet size, will follow up.
I'm very skeptical that FTX has 10B USDT on the balance sheet. OP here says Sam has billions of tether, which makes sense but is not enough to blow them up, and is likely in Alameda being as he says it's for trading, not in FTX.
(Of course it's possible that FTX has 10B in USDT deposits, but that belongs to their customers who would be very sad if it nuked but doesn't directly hurt FTX.)
Futures insurance fund may be an issue, yes, especially in scenarios where it shifts very rapidly. If you have math on a plausible scenario and total losses across the major markets I'd be interested in seeing it. But you'd have to be looking at several billion in losses or at over 1B directly attributable to FTX for them to go bust - they've raised over a billion and make 350M/year per recent Forbes article, so that's a lot of capital.
https://app.fulcrum.trade/trade
5% is a low cost for a short position that you believe will eventually pay out 100%.
alternatively, could another stablecoin take the place of tether, without any fundamental change in crypto trading volume?
Knowing pretty much zero about DAI (and honestly, not too interested to spend any time to learn), this still sounds incredible. Does that incapability hold even if prices of whatever underlying assets are not continuous? Like, at one point of time the asset is trading at 100 dollars, and at the very next moment it trades at 1, with no possibility for anyone to trade at 50 at any point in between?
I very much assume not. If you think that is laughably stupid to assume that prices would not be continuous, well, you are in good company, even some Economics Nobelists have fallen on that trap. And lost billions. In that case you may want to spend some time researching what comes up when you search for LTCM.
[0] https://www.circle.com/blog/evolving-usdc-reserves-to-100-ca...
[1] https://twitter.com/emiliemc/status/1429664322725158914?s=20
> Digital asset markets and exchanges are not regulated with the same controls or customer protections available with other forms of financial products and are subject to an evolving regulatory environment. Digital assets do not typically have legal tender status and are not covered by deposit protection insurance.
They're regulated as money transmitters like Venmo, and depending on the state, that can mean as little as "pay us a few thousand dollars and we'll ignore you." This regulatory framework was created as a way of side-stepping the more onerous regulations that apply to real depository institutions. Thats why they were able to invest the backing in ... whatever before the SEC came knocking.
This is simply not the case. Most, if not all, state money transfer regulations mandate financial reporting to the state, and place limitations on the permissible investments that a licensed entity may hold as backing for customer obligations held in trust. Any failure to comply will result in fines and/or loss of the license (which effectively results in the closure of the money transmission business).
A number of states (California and New York among them) also conduct on-site examinations of licensees' businesses (paid for by the licensed entity). As someone who was has served as a senior executive at a company that undergoes these examinations regularly, I can assure you that they tend to be rigorous and all-encompassing.
> This regulatory framework was created as a way of side-stepping the more onerous regulations that apply to real depository institutions.
This regulatory framework was not created as a way of sidestepping anything. It was created as a way to proactively regulate money transmission.
Money transmitters are not depository institutions; they serve a different, more narrow economic function, and existing regulations are properly tailored to that economic function. In practice that means that money transmitters are required to maintain 100% reserves backing any and all customer obligations, they must hold their reserves only in certain permissible investments (i.e. government debt and bank deposits), and they are required to obtain surety bonds to further insure those obligations.
Venmo, PayPal, Western Union, Money Gram and dozens of other companies are all subject to these requirements, and there has never been any instance that I am aware of where this regulatory arrangement has resulted in consumer funds being lost, in the twenty years since this regulatory regime began to be fully implemented after passage of the USA PATRIOT Act.
Furthermore, I am not seeing what the material difference is between the outstanding obligation represented by USDC and the outstanding obligation represented by a PayPal or a Venmo account. The fact that the law treats them the same is entirely appropriate.
Tether is a problem precisely because it is unlicensed and has thus far illegally evaded these regulations. The fact that Tether is operating illegally in the US should not impugn its competitors that are in fact operating legally.
What a lot people can’t seem to grasp about 2012 is Bitcoin miners were flush with Bitcoin and no place to spend it, no place to invest or divest it. So you are bored it’s a nascent market you browse the forum it’s all one big joke anyways- until it’s not anymore. But you are looking for something to do with Bitcoin and you have to possibilities: bitcointalk or #bitcoin-otc of freenode
One of these requires a registered gpg to trade, one is a dang website
So flush with bitcoins We were running Perl pool hopping proxy scripts to game block rewards and jump to deepbit last minute pre next block - boosting profits by 25%. Trendon Shavers aka The Jimmy Buffer PonziMan also ran a mining meta pool gpumax.com where we could buy gpu shares, say 10 million shares of hash power from your 10 buddies running 10 rigs stuffed full of gpus and then you point that at one of the two Bitcoin mining pools that were left paying a Proportional payout scheme instead of PPLNS (pay per last n shares) and take most of the whole pool rewards in a flurry of blocks blocks blocks… kinda like satoshidice except fun - maximizing ROI and exploiting Bitcoin mining pool payouts was kinda neat for awhile
I normally don’t do this, but the comments and citations have me feeling nostalgic and I do enjoy reading u/arcticbull
Jcpham is very much a real person talking about real things from the past: https://serajewelks.bitcoin-otc.com/trustgraph.php?source=jo...
It really was all a game in the early days, then it blew up.
I always get downvoted here because I don’t cite sources :-)
The over the counter chat and trade seemed to end around the first big ATH blow up of 2017. The prices got too high and the conversation ended, my friend.
I’m still around on libera
Bithopper would basically jump to, or jump away from deepbit( the largest proportional payout pool) on long rounds, long 10 minute blocks.
Deepbit and Bitcoin.lc were basically the only two proportional pools you could overwhelm with hashpower, take block rewards from the pool, and damn anyone’s shares or how long they mined there for how many blocks.
Others could and should be able to speak to pool hopping but this is why the pools pay the way they do - we exploited the payouts early
Excellent documentary involving him called "Open Secret".
It will just cost you a few % APR to keep the position open
Never been audited, only attestations
And what happens if Coinbase were unable to convert all the USDC because the demand exceeded their stockpile of USD?
Everybody at Coinbase is known, it's operated from the US.
Coinbase ain't anywhere, not even remotely, like tether/bitfinex. There totally exists a world in which USDT goes to 0 while USDC is still worth 1 USD.
Also Coinbase is not so pristine or pure. They were misleading customers with a gentler version of the same thing Tether did. "Coinbase Vowed Token’s All-Cash Backing; That’s Not True". https://www.bloomberg.com/news/articles/2021-08-11/coinbase-...
I would bet money that Coinbase has a button on their admin panel that says "Pause redemption of USDC" or equivalent, so you're just hoping they don't push that button in extremis. I find that silly, if what we're hypothetically betting on is that the crypto system will be in extremis.
What you are missing is "counterparty" risk in the sense that Coinbases coffers are not infinite and certainly not 100% cash.
In the event of a bank run they would have to say "sorry we can't pay you right now...maybe later...maybe never...nobody knows".
That would effectively kill any trust in USDC and it's value plummets through the floor.
This architecture doesn't exist AFAIK - certainly no trustworthy parties are offering it (since why would they want Tethers?).
Why would AAVE blow up if USDT blows up?
https://beincrypto.com/coinbase-drops-guarantee-of-usdc-stab...
> "the assets in fact include commercial paper, corporate bonds and other assets."
You're right. Their latest attestation[0] does not yet reflect their move to only cash and treasuries[1].
0: https://www.centre.io/hubfs/pdfs/attestation/2021%20Circle%2...
Without a date I can't compare the short interest at Kraken to e.g. the $100,000,000 OI in USD-settled USDT futures at FTX today.
Took me all of 10 seconds to find this.
It should have been a huge story, but there seems nothing reported
https://www.google.com/search?q=kraken+usdt&tbs=cdr:1,cd_min...
If something that weird (a USDT price spike to $1000) really did happen, somehow nobody noticed and nobody was affected, in spite of millions of dollars of daily trades in that market at that time
It's probably a glitch in Kraken's historical chart
It’s not a glitch. How you can say it’s “probably” a glitch is beyond me, you have zero evidence to support that. There have been other instances of Tether spiking well above $1, that is simply the most egregious.
But I'll tell you now, to save you time: there are no such reports, because it did not happen.
I don't know anything about 'other instances', I only assume that spike on the Kraken chart that you linked to must be a glitch, because I found zero corroborating evidence for it. As you yourself have implied, such an insane price spike would have been a significant incident so it could hardly have gone unnoticed.
Your arguments would be more persuasive if you based them on facts.
Or were you just equivocating between DeFi and centralized exchanges in response to a comment that specifically suggested DeFi?
[1] Which is not to say they can't be manipulated at all, but you'd have to go after the entire market or exploit some existing bug; it's different from the ones where centralized exchanges pull arbitrary shenanigans on their own platforms.
As for DEXs being manipulated, absolutely not sure why you believe that’s the case? This has nothing to do with DEXs and everything to do with margin (which is coming to DEXs).
DEXs and AMMs make it much more expensive to provide liquidity in terms of capital efficiency versus CEXs, and thus more vulnerable to manipulation. But without margin, there’s not much economic benefit for a bad actor.
Certainly -- I agree OP (arcticbull) was replying to a comment about DeFI by explaining the dangers of a centralized exchange! That makes it a confused, unhelpful response, not one that "obviously" meant something coherent if you squint hard enough and practice sufficiently strained exegesis.
>As for DEXs being manipulated, absolutely not sure why you believe that’s the case? This has nothing to do with DEXs and everything to do with margin (which are coming to DEXs).
Margin has "come to" DEX the moment smartcontracts offer collateralized DeFi lending, which they have, so I'm not sure what you mean here.
>DEXs and AMMs make it much more expensive to provide liquidity in terms of capital efficiency versus CEXs, and thus more vulnerable to manipulation.
The reason (I'm claiming) centralized exchanges are more vulnerable is that
a) they own the platform and are the word of god on it -- whence the stories of people getting margin called at flash-crash prices that don't exist on other platforms. If they say prices are trading at some level, you just have to deal with it. That's not possible when you have to trade how the algorithm says.
b) If someone "stupidly" buys in one direction on a DEX, "for manipulation", they've vulnerable to the entire universe of arbitrageurs who can exploit the resultant price differences. Inter-[centralized] exchange arbitrage is much harder.
I brought up the point simply to emphasize that, to the extent that there's manipulation, it does not look like the manipulation you'd see on CEX, which was how OP was basing his argument.
Furthermore, even the issue of more expensive liquidity from transaction fees wouldn't be true for the far-cheaper L2 sidechains.
(Btw, you might want to use the terms in their unabbreviated forms at least once just to make it easy on people who aren't up to speed.)
Ok, fair. What I mean is high leverage, which is the fuel for the type of manipulation I’m referring to.
To your point about CEX lying about price, that’s a very risky proposition for the arbitrage reasons you mention (CEX arbitrage actually easier for a number of reasons, but I understand why you’d think DEX is easier).
If I run a CEX, unless I collude with every other venue I risk all the arbitrageurs buying/selling my fake prices which means it’s not fake, I’ve just traded against them.
> Furthermore, even the issue of more expensive liquidity from transaction fees wouldn't be true for the far-cheaper L2 sidechains.
No, I said capital efficiency, not execution cost. DEX costs are crazy, but that’s by choice, whereas the capital efficiency is a structural issue. If I want to provide liquidity on 100 CEX markets, I only need enough capital to wear the orders I actually get filled on at any given point in time. As an AMM I’d have have enough capital to be in a 100 different LPs.
To illustrate: let’s say I want to provide $1m of resting liquidity in 100 CEX markets. Let’s say that in doing this, I end up having positions at any point in time that require $10m of capital. If I want to provide the same $1m of liquidity in 100 DEX markets, I need $100m.
So a CEX ends up being 10x more efficient from a capital use perspective.
Why does that make a difference? And how is it any more coherent to talk about margin "coming to" DEX? The moment anyone can borrow on margin, it has "come to" DEX. You keep speaking with a mental model of DEX that doesn't jibe with reality, like they're walled gardens rather than platforms open to anyone with little friction other than gas fees.
>To your point about CEX lying about price, that’s a very risky proposition for the arbitrage reasons you mention (CEX arbitrage actually easier for a number of reasons, but I understand why you’d think DEX is easier).
It's fun to idly speculate about this, but we know for a fact that flash crashes have happened on centralized exchanges, which is stronger evidence than any of your assertions of superior understanding of how they work. Furthermore, people have had their margin liquidated on those CEXes at the fake prices.
>No, I said capital efficiency, not execution cost. DEX costs are crazy, but that’s by choice, whereas the capital efficiency is a structural issue. If I want to provide liquidity on 100 CEX markets, I only need enough capital to wear the orders I actually get filled on at any given point in time. As an AMM I’d have have enough capital to be in a 100 different LPs.
If that's what you meant, then it's coming from the same dubious mental model I complained about above -- when you enter into a liquidity pool, you are providing liquidity to the entire cryptocurrency's network, not just people who are "on" that DEX (which isn't a coherent concept). Anyone and everyone has the option to accept that offer (sorry, "remove that liquidity"). Several protocols look at the entire DEX market to find the best (combination of) price(s). You do not need to be in multiple liquidity pools (which, again, not a coherent concept).
LPs are not something you have to "be in"; you as a trader are free to accept the offers (sorry, "remove the liquidity") of any LP in existence.
It’s not, because I’m saying something different than you think I am.
> when you enter into a liquidity pool, you are providing liquidity to the entire cryptocurrency's network, not just people who are "on" that DEX (which isn't a coherent concept).
Um, what?!? I’m really not sure you understand how this works. What do you think it means to be an LP?
> Several protocols look at the entire DEX market to find the best (combination of) price(s). You do not need to be in multiple liquidity pools (which, again, not a coherent concept).
No, just no. You keep saying it’s not coherent but I don’t think you understand how it works. You might be in an optimizer that moves your capital around, but a given unit of capital can only be providing liquidity for one LP at a time.
> LPs are not something you have to "be in";
Uh, if you’re not in it, then you’re not providing liquidity. This whole conversation is premised on providing $X liquidity to Y market. In a DEX that requires $X, whereas in a CEX, it requires a maximum of $X and in practice a fraction of $X.
>Uh, if you’re not in it, then you’re not providing liquidity.
Why did you cut off the rest of that sentence, which clarifies that I was referring to traders not having to be in an LP to accept an offer (sorry, "remove liquidity")?
People who really have some deep, coherent insight don't have to resort to that.
Furthermore, the point was that, even though you provide liquidity "to" a liquidity pool, that liquidity is available to the entire cryptocurrency's market, so "being in" the LP isn't a meaningful concept (with respect to whether you can buy from it -- though you'll still probably cut this off).
>I’m saying something different than you think I am.
The great thing about a discussion forum is that you can point to specifically where someone misinterpreted what you said and correct it. If you're just going to assert that someone totally misinterpreted you, but never clarify what you claim that deep insight was, then I'm not sure what you think you're adding to the conversation.
>Um, what?!? I’m really not sure you understand how this works. What do you think it means to be an LP?
It means that a) you have locked up tokens in the pool, and b) you receive a fraction of the fees when someone trades with it. You're still working from the (incorrect) mental model that thinks a DeFi LP is some walled off garden. This is in error. The LP is available to trade with everyone using that cryptocurrency's blockchain. So it's not very meaningful to speak of traders who can't trade with you because they're not "in" "your" LP. Once your liquidity is in any LP, everyone can access it. You do not need to provide it to more than one pool, as your premise requires.
Let’s say I want to be a market maker on Binance, in both BTC/USD and ETH/USD. Let’s say that I have a strategy where I can provide $5m in liquidity to each of those markets (i.e. $5m of orders for other traders to aggress) for a total of $10m of liquidity. But because most of the time those orders are just resting unexecuted, it turns out I actually only need $1m in capital to run my market making algos.
In the DEX example, if I want to provide $5m liquidity to a BTC/USDT LP and $5m to an ETH/USDT LP, I need $10m to do this.
So to run my $10m liquidity provider on a CEX I only need $1m whereas in order for an AMM to provide $10m in liquidity, it needs $10m in capital.
Now that I see what you're saying, it still doesn't prove what you think it does. If you can remember back to the original point, the question was whether DEXes can be manipulated to the point of forcing margin calls. I was skeptical, since we have seen localized flash crashes on CEXes (when you insist are not possible because of super-easy inter-CEX arbitrage) that forced liquidations, while we have not seen that on DEXes [1].
I further expressed skepticism since any manipulation would have to be via "stupidly" overpaying in one direction on one LP, which would just draw traders -- from the entire market -- in to exploit the price difference, and correct it.
You kept appealing to the MM capital-inefficiency issue, but that isn't relevant because my point was that the counteracting force is from liquidity consumers, not providers -- the traders that accept the LPs' (formulaic) offers, and profit from the attempts to artificially push the price one direction across the entire market.
Your latest reply feels like a further confusion, because (AFAICT) you're effectively saying, "Don't worry, CEXes are more manipulation-resistant because I can falsely represent myself as being able to trade in $10m when I only have $1m".
If anything, that would mean they're more vulnerable to false signals about price support/resistance: If you can't actually put in $10m, you weren't really providing $1m of liquidity, and DEXes simply make this transparent.
[1] though arcticbull mentions a case where the value could be propped up for a similar kind of attack: https://news.ycombinator.com/item?id=28798110
> One of the most notorious flash loan attacks to have ever hit the space is the exploit on DeFi protocol bZx, where the attackers borrowed funds from the platform and quickly swapped them with stablecoins (sUSD). Since the stablecoin is governed by a smart contract, the attacker had manipulated its price by placing a large buy order on sUSD, which pushed the price of the stablecoin to $2, doubling its pegged value. Then, the attacker took a larger loan from the higher-priced sUSD, repaid his loans, and took the profit with him.
It's relevant here because stable coin prices can be manipulated at DEXs too, or at least have been in the past. I'm not sure there's a long enough track record to guarantee it won't happen again before things go pear shaped if you're trying to take your short structured this way via DEX. There's smart contract bug risk, counter-party risk in the stable coin collateral and peg risk. Also regulatory risk.
But liquidations are only triggered on oracle updates. And those happen at fixed intervals (measured in time or price movement), and can only happen a block at a time, in blocks after the flash loan has been closed.
If you have enough capital to weather potential dislocations, the only real way to play this is to be long off shore (perps, probably) and short CME. This position is long BTC/USDT vs short BTC/USD, the net of which is short USDT/USD. The reason for doing it this way is if it doesn’t play out, or goes to 100k first, you’re just wearing a bit of spread and funding risk, but let’s call it delta neutral. OTOH, if Tether nukes, crypto will explode in Tether terms (since it’s worthless) and implode in USD terms. Now, you won’t actually get paid on your offshore long because the house is bust, so you’ll have a paper cut there (keep as little margin as possible). But your CME short will pay you nice, hard, centrally cleared greenbacks.
CME: short $1m BTC futures (which are dollar settled and thus BTC/USD)
On Binance you are long BTC, and short USDT. On CME you are short BTC and long USD (implicitly on the fiat legs).
So if we add that up, the BTC positions net off and you’re just left with short USDT and long USD which is the desired outcome.
In practice, if Tether implodes I would expect everyone to sell Tether (by buying crypto with it) and then due to panic, to send that crypto to exchanges with fiat off ramps where they will then sell it. So the price of BTC on Binance goes to the moon, and the price on CME collapses. You will likely lose whatever money you had on Binance (your profit is denominated in worthless USDT and Binance is probably bankrupt at this point) however you should make multiples of that with your CME short.
This is all of course not investment advice and extremely hypothetical.
How long could this arbitrage oppportunity exist? It doesn't sound all that reasonable, in my opinion.
Nobody is lending us anything in the above example (well, Binance perps and CME futs have embedded leverage but that’s another story).
This is what I'm trying to figure out too.
Basically, how do you buy $1m worth of BTC/USDT perps without depositing $1m of USD into Binance? Let's say if we put in $100k USD with a 1:10 leverage, it means the position on Binance is wiped out if BTC drops by more than 10%. So the only way for this to work is to deposit $1mil of USD into Binance and opening the position. But this means we lost a whole $1m when Binance implodes, cancelling our gain in the short position.
Otherwise, we need to borrow $1mil of USDT to open the Binance BTC/USDT position.
What did I miss?
Whatever the reason, no guarantee you can deposit collateral.
Unless I'm missing something in your math...
A more concrete example:
Buy $10k USDC, borrow $5K USDT on Aave, trade this for USDC on Uniswap
Net result: $15k USDC and -$5K USDT, if USDT crashes you gain $5k, if it doesn't, you pay ~4% APR on the $5K loan (current rate, variable)
You’re already short USDT anytime you buy crypto in USDT terms (i.e. BTC/USDT). But if Tether nukes, and you’re long BTC/USDT you will likely lose a lot of money, even if BTC/USDT goes to the moon. Why? Because BTC in terms of all other fiat (BTC/USD) will implode.
You must have a short crypto vs long fiat leg to net off and leave you with a true Tether vs fiat structure.
That doesn't make any sense. If I buy BTC with USD and then transfer it to an exchange with a BTC/USDT pair, I'm not suddenly "short USDT".
So I don't see why buying BTC with USDT directly makes me short USDT either if I didn't borrow the USDT but bought it with USD
It does, it just doesn’t make you short against USD which is what you’re thinking of. It only makes you short vs. BTC which we expect to collapse in price as well. This is why you need the other leg.
> So I don't see why buying BTC with USDT directly makes me short USDT either if I didn't borrow the USDT but bought it with USD
Which is why I keep talking about margin and perpetual swaps. Since we expect to lose our shirt on Binance, we need a levered position which means borrowing the USDT which will ultimately become worthless. This borrowing happens implicitly in a swap or future.
Back to your first question, when you buy something, you’re going to denominate that in some unit of account. We usually write this price as saying asset A is $X or asset B is €Y. But in reality every market is two asset pairs, no different to FX or crypto. We could have talked in terms of A/USD being X or B/EUR being Y. It’s just a different convention.
So when we talk about (for instance) the price of AAPL stock, what we really mean is AAPL/USD. Or when we talk about the price of crude oil we really mean CL/USD. I am buying AAPL, selling USD. Or I am selling crude oil, buying dollars.
To illustrate let’s say that you’re long AAPL (AAPL/USD). If shortly after you buy AAPL, the dollar loses purchasing power versus all other currencies, net net we would expect AAPL to go up in price (otherwise known as inflation). It’s not that AAPL became more valuable, it’s that the USD became less valuable. So you’re implicitly short the dollar. You sell your AAPL, and pocket your profit. You could frame this as being short USD and then covering your short. Same thing.
The opposite also holds true. Let’s say you short AAPL (remember: AAPL/USD). This leaves you long USD. If the purchasing power of USD increases, ceteris paribus, the price of AAPL should fall (otherwise known as deflation). You cover your short, and pocket your profit. You can view that as being short AAPL and AAPL going down, or you can view that as being long USD and the dollar going up. It’s the same thing.
It's not always clear when talking about complex domains, what is obvious and what isn't. My first comment in this thread explained why a simple USDT/USD short is not a good idea. I thought I had explained it in very simple terms, to help people with less experience understand.
HN has a wide spectrum of users, and obviously some people still needed more info, which I was happy to provide. I thought I had explained it plainly but obviously I hadn't. It's easier said than done to imagine a good explanation for something like this without having any experience in the area.
I may have just gotten it wrong.
This sounds eminently reasonable to me.
However, it immediately reminds me of all the people (I haven't seen one in a while though) who go on about the geopolitical significance of what currency oil or other commodities is denominated in.
I'm just not sure how numerous and influential the latter sort of view is, and it unsettles me at times when they appear to be everywhere and the things you say aren't.
Tether (and most crypto) seems like someone copied Ponzi's original scheme 1:1. Put in some money, transfer it to another format (Tether to other crypto, with Ponzi it was stamps), then eventually pull out loads of cash. Some people will undeniably get rich off it. But it's not sustainable.
You can spend $1 USD to get 1 Tether that is "redeemable" (by trade, not through the Tether company) for exactly $1 USD. A Ponzi requires some kind of promised payout, no?
This is all elaborated in the article.
Now if, for some reason, too many people decide to withdrawal and cash out on their Tether, there's not a sufficient cash backing there. It'll completely collapse and people will be left with a bunch of Tether that's no more valuable than any other bunch of random sequences of 0s and 1s on the internet. This is no different from the original Ponzi scheme. Just replace crypto with stamps/international reply coupons and it's absolutely identical.
This distinction doesn't even make sense though. The Tethers aren't redeemable directly from the Tether company. People redeem Tether for USD by market transaction. As these Tethers are just USD IOUs, it doesn't seem to matter much whether they are fully backed by USD, as long as there is liquidity to buy and sell them for their full USD value as required.
The specific claim that was made by GP, and the claim that I see bandied around, is that Tether is a Ponzi scheme.
Tether doesn't appear to share any characteristics with a Ponzi scheme, which is why I am puzzled to see people so adament it is one.
The most important characteristic (IMO) is that there is no promise of a return. $100 of Tether will only ever be worth $100 maximum.
If anthing, Tether is basically operating as an unregulated bank. You're not calling banks Ponzis are you?
How exactly is X making a profit when they're just working as an intermediary? Why do they absolutely refuse to show their finances? How exactly are they getting the resources to do all this?
Now, am I talking about Ponzi or Tether?
They always use precise wording about their holdings “commercial paper”. I’m guessing it’s not US treasury bonds equivalents or they would say that explicitly
Could they come clean, will there be a bank/USDT run?
Depends of how much USDT real clients hold and how much USD they hold, and how likely it is that EVERYONE wants to convert USDT back to USD -- it would take a very catastrophic collapse of cryptos for that to happen.
USDT has intrinsic value for money laundering, so even if all other cryptos would go to 0, not everyone would want their USDT converted to cash.
While I don't like USDT, and I don't think that's the case --someone printing USDT could have already amassed a great fortune, and if he was benevolent enough, could probably redeem all USDT of all the real people holding USDT.
By what you describe, the crypto purchased with Tether would be the Ponzi... but that's not the subject of this article or my question on why people insist Tether is a Ponzi.
2. The appreciation of crypto generally. If Bitcoin offered to pay out interest based on how many invested, people would see it more transparently as a ponzi
You can do it directly on FTX, or you can do it on ethereum by borrowing tether on aave against, say, USDC, and then selling it for USDC.
You can do this in significant size, 8 figures+ if you'd like.
The same ability is spinning up for sushiswap as well if you don't want have any exposure to other assets blowing up and threatening the collateral you care about.
I’m no expert, but wouldn’t this be unrealizable?
If tether were to fall it’s not crazy to think it would take with it most exchanges, given how most of them use USDT for maintaining operations.
I’ve just given up on crypto at this point. I’m a big proponent in “invest in things you can understand”, and crypto is a space where very little people really understand what’s going.
You can call that FUD if you want, but not acknowledging that crypto is a wild, wild west with a lot of shady corners, will set you up for a big reckoning at some point.
How many people understand the US banking system? What a bank is allowed to do with your $, how inter-bank payments are settled; how a bank secures its records; under what circumstances a bank might lose its records; what recourse you have in the case that your bank loses your records or makes what you believe is a mistake… yet everyone gives money to their bank.
2012 Bitcoin was great: it takes all of an hour to understand the entire protocol, the act of building/installing bitcoind shows you the entire surface area, and everyone interacting with it understood as much about it as you did. Contrasted to the substantially more opaque banking system, where most people don’t understand it, but trust it due to the test of time.
2021 crypto is indeed different. Now it’s approaching similar complexity to the existing banking system. But do I still understand it better than banking? For the low-level abstractions: BTC, ETH, etc: absolutely — especially so now that we’ve seen them fork and understand the hypotheticals there better. Higher-layer social protocols like NFTs… maybe not. So I stay away from those. Crypto gives you optionality that existing digital investments completely fail at. So that’s nice from your “invest only in what you understand” perspective, right?
FTX in particular has standard coin/USD pairs and also USDT pairs. No reason that USDT collapsing would cause FTX to go bust. Alameda and other market makers might lose a ton if they didn't see it coming.
If Tether goes completely bust, it's likely that closely associated exchanges won't be able to cover the bets.
Until that happens, they control all the levers and can just move the market as necessary to make you lose your bet.
Also don't understand what moving the market means in this context. The market is at 1:1 for USDT/USD, if there's selling pressure that would lead USDT to trade under $1, the only way to manipulate that is to buy lots of USDT from everyone who wants to sell, which tends to support the peg. Not even sure why that's called manipulation. If there's a real panic and tether turns off withdrawals there's no way anyone has the money to buy everything up at peg.
Not if you're a US citizen
Some of you may have heard his name before as he is a former head of state, Trump.
Just to point out that it is not hard to fool financial press and others about a firm's true financial position in terms of losses and gains.
Re your second claim, that’s a common misconception. The price of bitcoin would skyrocket against USDT but pancake against USD.
Who in their right mind would sell their (actually worth USD) Bitcoin for your worthless Bahamian IOUs? Absolutely nobody. So you’ll see a massive skyrocket against USDT and as soon as people realize what’s going on, it’ll go no-bid. RIP.
Then the ensuing panic will cause selling on USD markets, arb bots will turn off, and that selling will be accelerated by the few who got BTC from their USDT piles as they run for the exit. Then exchanges will go down for “maintenance.”
You don’t need to believe me, this happens with every exchange insolvency. It happened at Gox and it happened at Quadriga.
runs fundamentally all work the same way, whether its Greek bonds, deposits in a bank, etc.
I believe they even forced a change to Omni to support blacklisting after they were 'hacked' [2] a few years ago (scare quotes because it was never investigated or IMO resolved). [3]
It's highly antithetical to the Satoshi white paper.
If Tether gets shut down and their leadership banged up, I strongly suspect custody of the network will fall with the DoJ and they could, at their discretion, freeze all tokens pending full AML/KYC and source-of-funds of holders. Whether this is a credible fear or not, the ensuing fear and chaos would almost certainly break the $1 peg, especially once their exchange friends stop supporting the peg and turn states witness.
[1] https://www.coindesk.com/tech/2021/08/11/returned-funds-blac...
[2] https://www.coindesk.com/markets/2017/11/21/tether-claims-30...
[3] https://github.com/OmniLayer/omnicore/releases/tag/v0.3.0
I don’t know if this is /r/wsb leaking but markets do not tank because market makers pull back…that’s just not the business they are in.
Either that, or their bid will be 0, like on 0DTE options that are far out of the money.
> Either that, or their bid will be 0, like on 0DTE options that are far out of the money.
What? This doesn’t make any sense. 0dte options are often some of the most actively traded. But I’m not really sure you get this stuff.
Source: career hedge fund options trader
Did you miss the “far out of the money” part of my comment?
What’s the bid/ask on the Oct 8 SPX 4550C going to be at open tomorrow, assuming SPX opens around 4400? Bid 0.00, Ask 0.05
I also understand there is resting (and possibly hidden, depending on the order types allowed by the exchange) liquidity on the order book that would be there if USDT collapsed and MMs pulled out, but how long do you think it would take for orders to evaporate for an asset that is rapidly approaching a 0 dollar valuation?
I’m just a dumb amateur, but I have a basic grasp of the mechanics.
Minimum price tick == 0.05 on ES options. I would sell you some for 0.01 but Globex won’t let me.
You do understand my original comment chain was talking about a complete tether collapse where it has 0 value and not just a temporary dip in price.. right? Go read arcticbull’s comment about 6 levels up, that’s the scenario I was referring to in my comment.
I’ve traded both ES and SPX options so you can stop quizzing me about them. By the way, minimum price tick on ES options is .25 (which is $12.50) lmao. If you don’t believe me, look at the option chain, mr career hedge fund options trader guy (your words, not mine).
Merlin is Bitfinex/Tether CFO Giancarlo Devasini. [3] Oz and CCC is Oz Yosef - their contact at the Panamanian money launderer Crypto Capital Corp. Here, they parked almost $1B of co-mingled funds without a contract at all and had it seized by various world authorities.
Merlin [15.10.18 10:01]
I need to provide customers with precise answer at this point, can't just kick the can a little more
Merlin [15.10.18 10:02]
the international I mean
CCC [15.10.18 10:02]
I will keep you posted here
CCC [15.10.18 10:02]
On the process of all international payments.
Merlin [15.10.18 10:02]
please understand all this could be extremely dangerous for everybody, the entire crypto community
Merlin [15.10.18 10:03]
BTC could tank to below 1k if we don't act quickly
> And this tin foil hat theory about tether pumping btc has been debunked repeatedly.
I mean, you can keep repeating that, but of course, it hasn't. I don't know there's conclusive evidence at this point although a massive class action suit against Tether for market manipulation was recently allowed to proceed by a judge after rejecting Tether's request for summary judgement. 5 of the 10 claims were dismissed - a few on technicalities - but 5 claims were approved to continue on the basis of suitably compelling evidence and off to court we go. [4]
>> The court did dismiss RICO charges against the defendants. However, it found the plaintiffs adequately alleged monopolization, market manipulation, common law fraud, and violation of the Commodities Exchange Act. [4]
I'll let the judge decide if it's FUD thanks :)
[1] https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen...
[2] https://cryptonews.com/news/how-merlin-lost-patience-trying-...
[3] https://www.ft.com/content/4da3060c-8e1a-439f-a1d7-a6a4688ad...
[4] https://protos.com/tether-market-manipulation-class-action-l...
I already said there was no conclusive evidence yet, but that's not the same thing as "debunked." A judge agrees. Had it in fact been "debunked repeatedly" then the lawsuit would not be permitted to proceed.
>> The court did dismiss RICO charges against the defendants. However, it found the plaintiffs adequately alleged monopolization, market manipulation, common law fraud, and violation of the Commodities Exchange Act.
A judge literally found based on the plaintiffs evidence that they have adequately alleged market manipulation.
So, let's see where that goes then, shall we?
Either the judge is wearing a tinfoil hat too, or I suggest new talking points.
Of course I don't like cryptocurrency, lol, it's hot garbage IMO. However, I wouldn't like it any more or less at $1,000 than I would at $100,000 (well, except that Bitcoin's environmental footprint cap is proportional to its price - so lower is better for the planet).
I'm very interested in exploring this concept.
The entire system is a fraud and the only things holding it together are people's ignorance and hypocrisy. They cannot bring down Tether without revealing the lies and hypocrisy of the entire financial system since the same arguments could be applied to either side.
I would not want to be a judge or lawyer on this case. There is no logic involved, the only way to debate this are extortion threats and threats of physical violence.
Which means - you would need something like a large drop in their backing assets (crypto, commercial paper, etc) + a confidence drop in the system large enough to cause a run on the bank, burning through all of their reserves.
If no catalyst like this occurs, the game could easily continue on for years.
"After I returned to the U.S., I obtained a document showing a detailed account of Tether Holdings’ reserves. It said they include billions of dollars of short-term loans to large Chinese companies—something money-market funds avoid. And that was before one of the country’s largest property developers, China Evergrande Group, started to collapse. I also learned that Tether had lent billions of dollars more to other crypto companies, with Bitcoin as collateral. "
So if they have a loan to an insolvent company that trades at 25 cents to the dollar, Tether’s attestation values it at 100%.
See emphasis of matter, page 2 of their attestation
https://tether.to/wp-content/uploads/2021/08/tether_assuranc...
It’s a loophole you can drive a truck through.
> Management’s accounting policy is to value assets and liabilities at historic cost plus any accrued interest and less any expected credit losses, or otherwise the redemption value where applicable. The realisable value of these assets and liabilities could be materially different if any key custodian or counterparty incurs credit losses or substantial illiquidity.
At least in principle they are supposed to mark down "expected credit losses". It would be nice if they spelled out what that means a little more, though.
1. Cost + interest - credit losses, OR
2. Redemption value
Seemingly they are free to choose either
[0] https://www.bloomberg.com/news/articles/2021-10-07/holders-o...
I think we know from history how that story ends.
In other words, when they say they have $1 dollar of assets for every $1 of issuance, is the asset an Evergrande promise to pay $1? Or is it an amount of stuff they can liquidate easily to obtain $1?
It's the former, of course. And the "auditors" they used checked and said "yep, they have the right amount of promises to pay from distressed Chinese companies that, if those companies actually pay, it will be enough money."
Not that this one sounds intentional, but it makes you think
Twitter for the Tether stuff (Bitfinexd, Bennett Tomlin, Cas Piancey, Doomberg, David Gerard, and a few others).
I sat in chat rooms with most of these crazy fucknuts a decade ago and that is frightening.
Fun re reading old court transcripts yay
[edit] this financial cancer can’t get excised quickly enough. The longer we wait the more will get hurt.
[1] https://cointelegraph.com/news/bitwise-tells-us-sec-that-95-...
95% of Bitcoin trading on *unregulated* exchanges was fraudulent. There’s a reason why people don’t use CoinMarketCap anymore and it’s precisely because it shows bad metrics from fraudulent exchanges.
> Of the 81 exchanges evaluated in the report, only 10 provide volume figures that are legitimate, according to Bitwise.
Coinbase is regulated as a money transmitter, like Venmo.
[edit] what I believe they meant was that 95% of all trading volume was fake and 100% of that came from the less reputable exchanges.
That old Upton Sinclair quote comes to mind: the finance guys are making a ton of money getting people to ante in and when you buy a cryptocurrency the only way you get your money back is by talking it up so anyone who's already in has a big incentive not to ask questions.
I am an extreme skeptic on all things crypto, I don't hold any and I think it's basically a gambling fad. But, with that said, I grudgingly recognize that it now has some powerful establishment interests behind it and things that have that tend to defy the laws of gravity, often forever. So I have no idea what will happen.
But it's interesting to contemplate scenarios. One obvious one might be that crypto values would be highly correlated to the values of specific stocks that are in favor by crypto enthusiasts (aka "meme stocks" or maybe Tesla, etc) and that if there's a full on crypto crash those specific stocks will be annihilated by margin calls, since it's the same set of retail investors.
That's one hypothesis, I'm sure there's many other interesting ones.
Bitcoin has a trillion dollar “market cap”. That’s about 4% of the US equity market cap. In reality bitcoin’s market cap is nonsense, the real float is much smaller, and the real market is much much smaller.
$GBTC has $35B aum, and that is mostly due to the massive bull market in the last 18 months (thanks to Tether). The amount of hard cash that has flowed in is a small fraction of that, perhaps something like $7B (and since done 5x in performance).
But $GBTC is OTC and so not everyone can invest, and a vanilla ETF would likely garner more interest. How much more I don’t know. But $NKLA was a $30B fraud at its peak and yet in terms of market health, it was hardly a blip on the radar.
Once you have big enough following, having enough systematic risk, you, average scammers can enter "too big to fail" category, especially in democratic countries.
If USDT successfully turned half of the U.S. families holding 25% of cryptocurrency-related assets, they can work out any scamming issues they have in hand.
When you play by the rules against cheaters, you usually lose.
There are no guarantees that you would get any money if you short something unregulated like tether.
How does the government not step in here?
“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”
Who outside of the automotive industry would notice if cars disappeared?
That's your answer: pollution is still a concern but only one of those is balanced against significant real-world benefits for people other than the sellers.
My previous skepticism of Bitcoin and cryptocurrency was due to short-sightedness. You almost have to dip your toes in, in order to understand its potential.
Memory of time passing seemingly gets very compressed the further back you go.
Additionally, Bitcoin is an attempt at disrupting elements of the financial world (and cryptocurrencies as-a-whole are going after ALL of finance, not just elements of it). This is _the most powerful and well-funded aspect of modern civilisation_, so there's going to be severe resistance (to put it mildly) to any threat.
It's also difficult to understand the concepts that are foundational to cryptocurrencies, and the average persons eyes glaze over (personal terminology my wife uses when I try to explain technologically difficult things that she really has no interest in) at the slightest dip into its technicalities.
Better examples may be smart phones, but mobiles have been around since the mid-80's at least (that suitcase-sized portable phone in Lethal Weapon), and laptops are of a similar vintage (my argument being that smart phones are a combination of these two existing technologies).
Smart phones also have that immediate-dopamine-hit working for their adoption rate whilst Bitcoin and cryptocurrency are a 'longer game' (arguably you could say those already on the 'inside' for crypto get the dopamine hit of profit or potential riches - rightly or wrongly, healthily or otherwise).
Think of cryptocurrency as building a brand new Central Banking and Wall Street infrastructure. 13 years is still breast-feeding against that behemoth.
Bitcoin, crypto, NFTs, it's always the same: "You don't get it, because you don't understand the fundamentals. <Insert obscure lingo here>".
It's just wrong. There is no real value for most people. That's why crypto bros hide behind complicated terminology. That's why the value proposition of Bitcoin changed a couple times. That's why the terminology shifts all the time as well. "DeFI" wasn't mainstream until like a year ago or two. The next bullshit terminology is "web3".
The potential (I say potential because I'm aware enough to know that certain things are not yet proven) value for "most people" is a reduction of the corruption inherent in the processing of financial transactions. This is far enough separated from the average persons day to day that it doesn't seem to have value. But things like the GFC bring that awareness to the fore... briefly.
The terminology doesn't "shift all the time" and if that's how you see it then you're not keeping up and therefore your opinion and commentary carries little weight. The terminology you're talking about is new functionality offered by the ecosystem, it's not a rebranding or business pivot, it's a new branch of services.
DeFi is an example of the services that can be built upon cryptocurrency (with smart contracts) and, like the cause of this discussion, takes time to build awareness and a customer base.
Web3 is just another branch of functionality that can sit atop cryptocurrency / smart contracts. The terminology may well be bullshit, just like "social" was web-2-point-oh way back seven years ago, but it's the concept that matters, and the alternative, or disruption, that it facilitates.
Web3 appears to be a kind of meta-internet. Bullshit terminology aside, I'm interested to see what will come of it.
The pricing for hardware, software, and especially connectivity meant that this was an upper-middle-class or richer phenomenon at first and it wasn’t until the mid-to-late 90s that it had become common for lower-middle class families to have a networked computer.
All of that is completely unlike Bitcoin’s day one availability to a billion people.
Despite those barriers, because network connectivity had actual value to people who weren’t selling it, unlike Bitcoin, many normal people paid money to get access to services like Compuserv or GEnie, the earliest ISPs started connecting businesses and schools, you’d hear about people taking an elective at the local college to get a student account, etc. Technical work adopted as allowed - email/Usenet support, FTP sites, Telnet access to applications and forums, etc. were all common before the web – but so were people reading the news, getting stick quotes or researching, playing games, or socializing - the first met-online marriage happened in the late 1970s if memory serves. Real people found it useful enough to pay extortionate telco rates, deal with modems, even getting second phone lines to avoid disruption.
That all contrasts sharply with Bitcoin which arrived in a world where a billion people had the ability to use it. The lack of adoption has been due to the lack of a need – and especially the community’s tendency to say “you don’t get it!” and rant when people explain real concerns such as cost, fraud, or lack of benefit over the other options. This is a dead tell for when people have major conceptual problems: if you can’t explain a system to a non-specialist at a high level, something is wrong. The fact that 13 years in people are still unable to come up with a compelling pitch for why someone would want to use Bitcoin beyond speculation tells us that long-term success won’t happen without major changes.
The central bank analogy doesn’t work, either, because that didn’t arise out of nothing but was rather formalizing existing banking relationships with goals like stability. That evolved over centuries and, most importantly, constant daily use — nobody went from storing money in the couch cushions to a central bank without an intermediate state. Similarly, central banks are backed by some form of real value. A pure fiat currency like Bitcoin with weak backing, plenty of competition, and no innate demand is not what you’d use for such a system — and, indeed, anyone who is familiar with the history can see that’s the concept people who’d bought into Bitcoin pivoted to after failing at the original goal of being a currency.
And yet 13 years later it seems to be pretty healthy. I wonder if there's maybe more to it than what you are allowing yourself to see?
There's interplay with other actors of course, the people that trade bitcoin are one of those actors. This kind of interaction also exists for physical objects like cars, they also only get their value by interacting with the rest of the world.
But yes if cars would disappear this would have an impact on more people simply because there are more people involved in the manufacturing process.
I was thinking more about the impact on users, not just producers. There are millions of people living in low-density housing where they have limited alternatives to go to work, shop, etc. – maybe e-bikes could be an option for some but in most cases you’d be talking redesign of entire cities. Many, many businesses would be disrupted - some fatally.
That’s what it looks like for people outside of an industry to depend on a technology. This can be seen especially in the case of the web: 30 years ago, a company in San Francisco making a mistake would not have meant that people in cities around the world would have trouble communicating or taking orders from customers. People find WhatsApp so useful that they based their daily life on it. Repeat for online ordering, advertising, support, etc.
Contrast with Bitcoin: statistically, almost nobody uses it for business or personal transactions and the few who do almost always have alternatives — usually cheaper and faster, if ideologically unsatisfying. If it disappeared tomorrow, there would be no lines at stores, no accountants wondering how to pay suppliers, nobody waiting for their paycheck or unable to get a mortgage.
How many banks does the US have?
> about $30 billion of its dollar holdings are invested in commercial paper—short-term loans to corporations. That would make Tether the seventh-largest holder of such debt, right up there with Charles Schwab and Vanguard Group.
"Would", because nobody in those markets has seen them.
Apple, Microsoft, Google, Verizon Communications and Pfizer COMBINED hold $400B in reserves.
If I had to choose USDC or USDT though, I'd rather hold funds in USDC. In general I'm not much of a fan of stablecoins though, but I do acknowledge the quick, 24/7 transfers they offer is interesting, as well as the high APRs for lending them. However, I'd still rather just hold fiat vs stablecoins. I find other cryptos to be much more compelling.
If you want fiat currency, use fiat currency. If you want a secure location to store and transfer your money, use a bank.
If you want to support a dodgy organization's fake digital money printing scam though, go with Tether.
None of those can be sent to anyone in the world and settled in minutes/hours.
Bennet Tomlin and Cas Piancey have done a fantastic job chronicling the story.
Their blog posts are also quite good:
- https://thecaspiancey.medium.com/finding-finex-3eefac0d45a2
The comments are great.
This article should not be flagged.
How did regulators not catch on sooner?
Why not?
The elites are working hard to promote scam projects in the crypto space. Only allowing unscalable projects to gain traction... But it doesn't matter, they work just well enough to do what they were intended to do.
The fiat system is making a mockery out of itself faster than it's making a mockery out of crypto.
If you look at the Tether/USD chart on coinmarketcap or whatever other exchange, it always seem to slightly fluctuate by a few decimal digits around the 1 dollar level.
No reason at all, huh? Anybody with even a remote interest in crypto knows why Solana has exploded. It's L1 season and Solana is a direct competitor to ETH, which suffers from high usage fees.
Every other L1 has exploded in value. As said, L1 season. These kind of statements make me suspect the author never used crypto in their life.
The cultural gap between crypto and non-crypto is pretty hilarious. The reason crypto holders don't give a shit about any of this, is because to them, a 50%, 80% or even 90% pullback of a coin is just an ordinary Thursday.
You can't threaten a crypto holder with "losing it all", because that's an everyday reality for them. And so is multiplying their wealth by 2, 5, 10, 100.
Why would so many people engage in this degenerate gambling? This is the part skeptics just won't get. Because the existing financial system/situation doesn't work for them.
Young people are locked out of any and all assets. They can't afford real estate or any meaningful amount of stock. Savings accounts have a negative yield.
Crypto is the asymmetrical bet. There's the sizable risk to lose it all, yet an upside potential that is countless times larger. And in the case you lose it all, it wasn't that much anyway.
It is an act of desperation and a sign of very unhealthy issues in our "regulated" economy: low wages, job insecurity, student debt, inflation, low interest rates, inequality, the list goes on.
For sure there will be another crash. Nobody cares. Because they have nothing to lose anyway and will just start over. Because the underlying economic issues did not change.
But as for actual usage, it's a smart contracts blockchain that is fast, proof of stake, yet has drastically lower fees than Ethereum.
Anything can be built on top of it but this particular rush was caused by a second hype wave of NFTs. As more people want to join the NFT frenzy, it got really expensive to mint one on Ethereum, hence people rushed to this alternative.
For the record, I don't own any solana and never have, just explaining what it is. I wish I did own it a year ago though.
So, speculation. That's what all crypto is for.
If you buy enough GM stock eventually you can give all your friends and family members Corvettes for Christmas.
Stock actually represents an enforceable claim on wealth that exists in the real world. Crypto not so much.
A typical stock holder can never claim any underlying asset nor do they have voting rights, so you're really stretching.
The difference is simply in risk appetite. People are going to keep drinking Coca Cola at large scale so owning their stock is low risk. But also low return.
Crypto is high risk, extremely high return. There's a sizable chance to lose your money but a larger chance to get returns that are astronomical. I'm talking 5x - 10x in mere months.
Past performance is not indicative of future returns.
The reason the rest of us on the other side of this fence aren’t being as loud is not because we consider the jury to be out - it’s because we’re being responsible with our claims. It’s why no-one is countering you with a claim that it’s all going to zero - as no-one can guarantee that will happen either.
Joining the cryptocurrency pyramid in 2021 and expecting 500% returns is foolish. Could it happen? Sure it could. It doesn’t make it as likely as those inside the religion are implying.
The parent's comment's "For no reason at all except gambling" was implied and likely not confusing to the reader.
Also happens to pretty clearly answer the question of why people have extremely serious concerns about all this.
The above shows the 400 or so things built on top of solano. I would expect for most projects to not be very useful to the masses and likely most will fail. Which isn't different at all to the typical startup scene.
I consider most of it garbage, and I would expect you to conclude the same. Which is fine. The only counter point I have is to not dismiss the entire space as a whole. Things are moving very fast, and some concepts are intellectually interesting, just poorly executed.
For example, NFTs are considered the most ridiculous thing ever now, but that doesn't mean they will be in this state forever. The next-gen NFT containing the actual art, copyright integration, and smart contract integration are a matter of time.
Imagine a photographer, currently sharing photos to stock services for pennies, with zero control over terms. Middle men milking them dry. With a fully integrated NFT chain, the photographer can claim and prove ownership and dictate terms. They can decide to sell 10 copies, and dictate that if they are resold, the photographer gets a 20% royalty. The photographer can make higher-end versions available, at higher resolution, wider color gamut and ask more for that version. This independent and advanced type of reselling is hardly possible traditionally. And importantly, 100% of the revenue goes to the creator.
NFTs can be entirely interactive, and can be anything. A photo, a song, a 3D model, a plot of land in a game.
Imagine being an amateur talented 3D model builder right now, and Hollywood directly buying your model. Which is something that won't happen right now because of B2B contracts and the complexities of dealing with small vendors. Soon it's just the click of a button, done. The possibilities of making a "digital living" will drastically expand.
Outside of objects having serious undisputed value (like 3D models), you may think nobody cares if you "own" the rights to a JPG. One can trivially copy it after all. This attitude, that all digital content is worthless and frankly has no owner, is curious. Even more so in a society almost fully digital.
Take Instagram, for example. Instagram takes everybody's photos for free and intermixes it with ads. Facebook gets 100% of the revenue and personal data, and you as the person actually creating the photo gets...fuck all. A 100% tax. In return you get "likes" or "exposure". Instagram may change terms at will, bury your photos in favor of video, or simply deplatform you.
I find this contradiction interesting. The Hackernews community rightfully challenges Big Tech on a daily basis yet refuses to spend a single thought cycle on the only concept that has the potential to break it down. Which is not regulation, it's the opposite: decentralization. Returning power and ownership to users.
There are only two killer use cases for crypto: speculation and prohibited transactions.
That's not snarky those are actually pretty great use cases that have massive demand and centuries of success behind them as a product category.
A large part of crypto is scams, but it's clear not all of it is. You couldn't really argue that bitcoin, in general, is just a scam for example.
But beyond that it's basically all gambling. People put money into crypto hoping to get more money out. Period.
That's a really fucking desirable product it should be pointed out. It's so desired by people that you can build an entire city in a desert on the concept, it's common to all societies in all eras of history. People just absolutely fucking love to gamble.
Every argument against this seems to be a variation on "Well sure, but one day they might..." and so on.
Which is cool. You're absolutely right to say that. One day it might not just be gambling.
But today, it is. That's why there's money in it.
I only disagree on details. Like the use cases you missed, some of a humanitarian nature.
For example, still a significant part of the world is unbanked, and has no access to the financial system at all. Crypto, permission-less and only requiring the internet and a smartphone provides a solution.
For people living under highly inflationary regimes (Turkey, Libya, etc), crypto can be an unconfiscatable asset to protect their savings.
Immigrants often send money back to their home country, and by means of international banking, lose a whopping 30% in transaction fees. Crypto can do it for near-zero fees.
A hardcore cynic may call these just variations of "gambling" but to me these details matter. Further, like you said, the very point of any asset is persist value and ideally grow in value. That's even true for just basic currency. So this deep moral outrage that people are trying to earn money is misplaced, it's the damn point of any participant in an economy.
Suppose that I want to sell my copy, but do not want to pay the 20% royalty. What stops me from selling it for 1 cent on-chain, but buyer paying me real price off-chain? How can a creator realistically expect to receive their royalty cut?
Anything can be programmed in a smart contract, and they're transparent, so if the royalty rules are not acceptable to you, don't buy it.
I think this is more than just a loophole - it's a fundamental weakness of the smart contract system. The smart contract can audit things which are on the blockchain, but cannot govern external actions. This is fine when the only objects the contract cares about are digital tokens, but once you integrate things like real-world art and associated rights, it becomes very easy to circumvent.
Can you do that? Sure. But it's no different from pirating anything.
I think we're overstating this example. An NFT owner might also claim zero resell royalties and instead go for a higher first-sale price. Or set the royalty percentage lower. I think some balance will be found.
A far bigger issue with NFTs is a single person buying their own NFTs using different wallets. This artificially boost the price, some fool falls for this high perceived value, buys it, and is then forever stuck with it.
The other big issue is front running. Knowing ahead of time which projects will be dropped on major marketplaces. It's insider trading basically.
You're not listening. Crypto holders don't care about those concerns. They willingly gamble. You can ban and shut down all of crypto (in reality, you can't) and they'll move to meme stocks or betting on sports.
You can't stop it or regulate it. Because it's a culture. It's an entire generation that is fucked anyway. Even the modest ambition of a middle class life style is out of reach. So they have nothing to lose, and will bet it all.
They aren't dumb or ignorant. They are fully self-aware, and self-identify as plebs, degenerates and ape investors. They know what they're doing.
The "concern" is misplaced and fails to impress. From their point of view, "regulation" is the traditional system which is exactly the reason why they're in crypto. The traditional system failed them.
The real concern should be aimed at the economic conditions that young people face. For as long as skeptics don't get that, they will never understand crypto and its culture.
The problem is as a society this isn't a positive thing, and we should put some energy into stopping runaway gambling fads because they are highly destructive when it all comes crashing down.
And it always does.
But I'll leave it at that.
The other thing cryptocurrencies potentially offer is an alternative financial system to the status quo. There are lots of bugs to be worked out, but it's well on its way, and Solana and Ethereum (as only two examples of many) have the ability to act as the platform upon which these financial services can be built.
It's an odd contradiction, but I'm used to it.
A whole lot of talk about middle class lifestyles being out of reach in the same sentences as “WHEN LAMBO?”.
I’m sympathetic to the widespread lack of upward mobility these days. This is confusing it with something else.
Is it most new buyers? There’s really no way to know.
It's a distribution like anything else. A handful of billionaires, a larger group of millionaires, and then comes the sweetspot.
The sweetspot for crypto is middle class (from lower middle class to higher middle class) doing a 5-10x from whatever they put in. Not enough to retire, but meaningful wealth. This return is within reach for almost anybody with some study, patience, and proper risk management.
1. Lend USDC and earn higher interest rate than my bank using https://mango.markets.
2. Trustlessly swap crypto using app.saber.so/#/swap.
3. Occasionally buy NFTs from artists I want to support.
Parallel economies exist. In the mainstream economy, your mainstream interests have every aspect of the market cornered. You only get in once they have taken all the worthwhile positions.
In the crypto economy, and yes, its a fully fledged economy and social network in 1, u can get in on the ground level and ride that hype up. You dont have to know that guy at that investment firm with that connection to that hot deal.
DeFi and the blockchain are allowing you to startup international companies in the blink of eye. Just the way traditional companies outsourced to the 3rd world, then import these goods and sell to a premium in local markets - as a crypto enterprenour u can now employ these same "call centre staff" (who were layed off in covid) to "play games for you" and you are able to pay them a HIGHER RATE then Apple or insert any any "tradtional stock" "traditional company". in phillipines for instance, you can get loans against SLP, u never need fiat. You can pay for goods at corners stores with SLP. micro-transactions in e-sports is legit and it will only get bigger.
People forget that captialists have BUILT a system and REINFORCED that system to ensure THE STATUS QUO. Crypto is about giving those people the FINGER. Those people kicked and screamed, but now they are ON BOARD. Bloomberg isnt as effective at causing a dip then say Elon though. Tether, like the real-estate markets all over the world, couldnt handle a big sell off. Covid showed that.
Sorry Bloomberg, your consoles days of cornering the market as gone! Your traders now need to keep there ear to the crypto ground, cause the crypto cultists are using there social networks to come for YOU. They can organise millions of bids in minutes. Your incumbents are not the only people who can pump and dump on retail investors. Tether is simply using tactics established by centralised finance. They poineered the China hustle years ago. https://en.wikipedia.org/wiki/The_China_Hustle
Lets stop pretending that the traditional stock market is built on fair and sound princples. Lets stop pretending that bankers get held to the same accountability as the ordaniary folks. These tradtionalists are incumberant in every aspect of the mainstream socio-poltical life. Like, the whole stock section of the nightly news is just as a way placate the general public and further there position and ideaology. One that preys on moms and pops and superannuation schemes.
So the utility of Solana is that you can, and I quote, "ride that hype up"? I think you've kind of proven the OP's point here.
You say this as if it’s a valid thesis outside of CT. Solana has exploded because Alameda, Cumberland and related VCs have made it so.
> Young people are locked out of any and all assets. They can't afford real estate or any meaningful amount of stock. Savings accounts have a negative yield.
Casually ignores Robinhood and equity markets, where most of any under 50s should have most of their wealth. Fixed income is a much bigger problem for old people than young people. Real estate, I will agree with you. But none of this justifies crypto.
The rest of your comment is truly bizarre. You’re defending it pretty strongly while also seemingly admitting that there’s little real economic value being created and that will result in a crash with people getting wiped out and starting over.
Why accept this? Why not focus on the real issues, instead of just accepting degen apeing with open arms?
It's super cool that their 5K turns into 6K in 10 years time, but that doesn't do anything. You might as well turn it into 100K. Or lose it all. Fuck it.
I don't think you understand the dire situation of younger generations. In my country, the AVERAGE home costs 485K USD.
The median salary is 36K. Young people have salaries lower than that. This allows for a mortgage of 166K.
So unless you're born rich, you won't ever get a house. Perhaps they can rent then, and meanwhile save up? No. Private rent eats up so much of their salary that there's no room to save. Which would be pointless anyway as real estate appreciates faster.
They can't move out, they can't start a family. These people have a life to live. My dad was 19 when he had a rental house, married, two kids, and 50% of disposable income on a job requiring no education. Now people are 35 and still don't have the basics in place.
Hence, crypto. Which is not just a bet. It's an expression of full distrust against the supposed "sane" traditional system.
Why not focus on the real issues? Because they are unsolvable. Wages cannot rise significantly as nations compete in global capitalism. Real estate won't become much cheaper. Jobs security will not increase and student debt is unlikely to be forgiven.
If a young person working full time cannot afford a roof over their head or start a family, is in perpetual debt, and has zero job security, perhaps some start to wonder what the point of it all is.
Ok, I get it. You’ve not actually looked at what other investments are like. 20% return over 10 years? The S&P 500 is on track to do that this year, after one of the biggest rallies in history last year. $5k invested just before the covid collapse would still be worth far more than $6k, and that’s 18 months through a global pandemic.
That said, your answered your own issue: homes are unaffordable. I’m with you on that: we turned housing into retirement plans for boomers. And now we don’t know what to do about it.
There’s an old adage in commodities trading: the best cure for high prices is high prices. The meaning behind this is that when prices are too high and people can’t or won’t buy, then prices can only go down. Over the next few decades, young people will either earn substantially more, or housing will become substantially cheaper.
You can’t sell anyone a home for $485k if they can only get a $166k mortgage. So these things will converge.
A lesser known reason is that since the 2008 crisis, hardly any new homes got built. Whilst the underlying demand was still in place, and growing.
"You can’t sell anyone a home for $485k if they can only get a $166k mortgage"
You only need enough buyers that can afford a 485K mortgage to meet supply. So when supply is very low (which in my country is very much true), if only 25% of the potential buyers can afford that mortgage it's still enough to buy the supply. Which they do, and they even overbid still.
So this can keep going for a long while. Not even a crash solves it. Our 2008 crash dropped prices by 20% only. Which is now the gain in a single year.
So that leaves the only other option you mention: wages.
All the things you mention, boomers did that. Monetary policy was drafted by boomers, for boomers, to protect and enrich boomers (low interest rates being one outcome). We printed trillions last year to protect boomers at the expense of young people. Scarcity is a function of zoning laws, again drafted by boomers to protect the value of their nest egg. It’s 100% their fault.
Why does it matter if you pay $1000 per month on interest or $1000 per month on the principal? The monthly payment is the same. The only difference is that the bank takes less of your money.
True, but the effects do show up today. When people have less children, the economy also consumes less, meaning less work needs to be done leading to a scarcity of the holy "well paying full time job". Instead you get a rise in part time jobs and as wages go down you also get an increase in "meaningless" employment in the service industry.
The lack of children that are consuming more than they produce has basically created a huge demand hole in the economy that the rise of "consumerism" is trying to fill. Meanwhile working age people try to save for (early) retirement and reduce consumption themselves.
As soon as younger generations secure a home, and when they resell later, they aren't going to give discounts to the next generation. Surely you can't belief they will?
Everybody that owns a home, regardless of generation, wants their home value to at least persist and ideally grow. Likewise, people want to protect their neighborhood, as it directly affects the quality of living.
It's natural and normal behavior, and not an issue in itself. The real issue is the infinite growth mindset in a finite world.
They can. If every country did balanced trade then there wouldn't be anything wrong with global trade. You'd get the benefits without any of the downsides. It's when countries export more than they intend to import that things are getting worse. Of course, balanced trade wouldn't allow the existence of global reserve currencies. The USD would have to give up a meaningless benefit.
By building things of value in the ecosystem.
If crypto was only these people, I'd have more sympathy for them. But in reality, it's some of those people, and then tons of far more sophisticated people who are trying to take advantage of the rubes. In the end, the Tether people will make out like bandits, and everyone else will be left holding the bag. It's like justifying Madoff because of the desperation of elderly people to extend their savings.
That's the price to pay for the incredible upside potential. People that can't stomach this, should simply not be in the game.
Alternatively, and the wiser strategy, is that you put a portion of your wealth in crypto, say 10-25%. The absolute worst thing that can happen is to lose it all, which is only possible if you don't know what you're doing. But is still survivable, as you still got your 75%.
Let's assume you're "sophisticated" and have 100K.
If you're not a complete moron, you then turn that 25K into 100K. It's stupidly easy to make money in crypto. Wait for a crash, get in, wait for the bull market. Which comes and goes. Allocate 75% to Bitcoin and ether and take more risk with the other 25% on midcap coins. Derisk by deploying a progressive profit taking scheme and auto buy small amounts using a DCA strategy. None of this requires even touching Tether.
So let's do the math. Your downside potential is from 100K to 75K. Your upside potential is from 100K to 175K. A reasonable timeline is 2-3 years, given cycles.
That's a 400% return on the crypto part. Doing only 400% in crypto terms makes you a shitty trader, it means you're very bad at it.
So that's why they call it an asymmetrical bet. The upside is many multiples of the downside. Asymmetrical bets are rare, once in a generation.
But they're not for everyone, and that's fine.
It's not just easy to make money right now, it's been like that for over a decade. Crypto in general is still growing exponentially (in usage and holders) at a rate faster than the rise of Facebook and the internet.
It's being mainstreamed, Wallstreet discovered it, the first nation has implemented it, VCs are massively investing, the first batch of musicians/artists are embracing it and Twitter is about to integrate both Bitcoin and NFTs.
There's plenty of very serious signs for further growth. It's still early in a way.
But I could be wrong, but that doesn't invalidate the point. Sizable downside risk, far larger upside potential. If you want something risk-free, just stay out.
Note that earning 400% is not only achieved by buying low and selling high. You can drastically speed up earnings using derivatives and leverage. Which is also the fastest way to lose it all, so don't. It's for the pros.
Have you ever 'used' ETH or whatever? And by 'use' I mean perform a transaction, not just speculate on its price
But that's beyond the point. I'm not a fan of either Solano or Ether, I was pointing out that the author lacks the most basic insights into crypto.
BUSD is a co-brand issued by Paxos.
No idea how it would hold up once the bear trap snaps shut on Binance.
You could try that.
[1] https://en.m.wikipedia.org/wiki/American_Innovation_dollars
https://en.wikipedia.org/wiki/Penny_(United_States_coin)#Num...
On the flip side, a US mint $50 piece is actually well over $2000 of gold [https://catalog.usmint.gov/american-eagle-2021-one-ounce-gol...]
The imprimature of the US mint is what makes these coins now.
SEC subpoena literally yesterday: https://coingeek.com/usdc-issuer-circle-financial-subpoenaed...
And CoinGeek is a notoriously anti-decentralization media outlet. It's a mouthpiece for BSV, whose founder, Craig Wright, has called for anonymity to be abolished in cryptocurrencies, and for miners who process decentralized exchange transactions to be jailed.
maybe the ones like lbry or steam.. publishing payment tokens.
DAI - but the MakerDao system has worse collateral than MIM, no interest bearing assets to my knowledge, but that can easily change with votes
If you're looking for a CAD stablecoin, checkout loonies and twonies.
1) Find someone you know and trust who owns enough USDT.
2) Borrow their USDT, then immediately sell them for USD.
3) Pay some fee over time for the loan, and then have the contract expire at some point.
You would need some kind of contract for the fees and end condition, but it could just be an email that you agree to. If you don't know and trust any cryptofans, then no, there isn't a good way.
There's also this not-small matter of making sure that banks aren't relying on overly optimistic valuations that won't bear out, especially in a dire market (if you're a too-big-to-fail bank, the government looks at your books and run its own numbers assuming a pretty severe economic crisis). In this regard, Tether's non-transparency is ringing alarm klaxons.
> As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions.
I've been swayed by the MMT videos on youtube which I know are controversial, but it seems to me that when a bank makes a loan, its deposits on-the-books increase, they do not have to have deposits equal to liabilities, and in fact a loan is not a liability to the bank, it is a liability to the borrower. Am I wrong?
[0] https://www.federalreserve.gov/monetarypolicy/reservereq.htm
The "reserve requirement ratio" basically means that for every $1000 the bank has in deposits, it is required to keep $X in its account with a Federal Reserve bank. Very specifically, it has to be money sitting in that account--a literal stack of $20 bills doesn't count for the reserve requirement. This has dropped to 0% because the Federal Reserve figures there's better ways of maintaining bank solvency.
Instead, most attention nowadays is paid on the capital ratio. This basically says that the bank needs to hold $X equity for every $100 of risk-weighted assets. My understanding is a little fuzzy here, but I believe that the equity here is completely separate from what's normally counted as assets for a bank.
They say they're fully-backed, so they better be.
Yeah, they've since walked away from that particular claim (which was a lie). They do not have 1USD in a bank account for every USDT issued.
Money market funds are 100% backed
This is a meaningless statement unless they have actual, physical dollar bills stacked in a warehouse backing the fund.
And even then, it would be a lie: counter-party risk even applies to physical stacks of dollar bills (they can be stolen).
I was saying 100% backing is the standard they’re regulated too and they published their backing in a very detailed way that anyone can check.
Tether doesn’t do this. They refuse to disclose their counterparties and they defined their own accounting standards where junk debt is valued at redemption value rather than market value
I strongly suggest you look into the sort of compliance banks have to do.
> People are dissatisfied with anything less than fully-backed when it comes to 'crypto'.
If banks these days failed (or their founders, friends, "hackers" ran off with the contents of the "vault") with the same frequency as crypto providers and exchanges, they would too.